Disney (DIS) Stock Lost 2%, Company Reports Lower than Expected Q2 2020 Earnings Results

UTC by Steve Muchoki · 3 min read
Disney (DIS) Stock Lost 2%, Company Reports Lower than Expected Q2 2020 Earnings Results
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Disney (DIS) stock is falling in the pre-market after a 2.05% drop yesterday, the fall is attributed to the rather controversial earnings results in its fiscal Q2 2020.

After closing yesterday trading at $101.06 with a loss of about 2%, the Walt Disney Company (NYSE: DIS) stock is down 1.40% in the pre-market to trade at $99.70. This is being attributed to the poor earnings results for its fiscal Q2 reported by the company amid the social distancing put in place to combat the spread of the coronavirus

The stock is among those largely affected by the COVID-19 crisis, with its future on shaky grounds. With more people opting to stay indoors to avoid contracting the deadly virus, it will take more effort for the Disney business to convince people to visit comfortably.

Its stock is precariously hanging on a support level that might either see it drop viciously or hang on till things cool down. However, if it continues reporting poor results in the upcoming quarters, which is the likely scenario, then a further drop will be inevitable.

The previous drop saw it wipe out all the gains made since mid-2015. A further drop will see the shares bleed out almost half of its current value. Depending on how fast a vaccine is approved and the businesses are reopened, things are not looking good for the Disney operations.

Disney Q2 and 6 Months Earnings for Fiscal 2020

In a press release on May 5, the Walt Disney Company reported earnings for its fiscal Q2 ended March 28, 2020. According to the report, the diluted earnings per share (EPS) from continuing operations for the quarter decreased by 93% to $0.26 from $3.53 in the prior-year quarter.

It also reported that diluted EPS for the quarter decreased by 63% to $0.60 from $1.6 in the prior-year quarter. On the other hand, the EPS for the six months decreased by 38% to $2.14 from $3.45 in the prior-year period.

The results above were largely impacted by the coronavirus pandemic. “While the Covid-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Bob Chapek, the CEO. 

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November,” he concluded.

Wall Street was expecting earnings per share of 89 cents on revenue of $17.8 billion, however, the company reported 60 cents per share on $18.01 billion. The company has resulted in suspending its dividend payout for the first half of the year, according to CFO Christine McCarthy.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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