What You Need To Know
Shares of Walt Disney Co. (NYSE: DIS) fell 6% after the company reported lower-than-expected subscriber numbers for Disney+ and a profit outlook that missed analysts' expectations. Despite this, Disney's earnings per share exceeded forecasts, while revenue for the first quarter was close to meeting expectations. This marks the fourth consecutive quarter in which Disney has outperformed expectations to some degree. The company's experiences division, which includes its parks, saw a 12% increase in profits, while streaming losses decreased significantly.
Despite raising streaming prices earlier in the year, Disney has not observed a negative impact. In the next quarter, streaming results may be weaker due to the timing of cricket-related costs in India, but the overall streaming business is expected to be profitable in the fiscal fourth quarter.
Disney's theme parks division experienced strong growth, particularly in international markets, while traditional TV networks reported weaker results. The sports segment saw a slight increase in sales but a decrease in profits due to higher domestic rights fees.
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Why This Is Important for Retail Investors
Investment Impact: Disney+'s disappointing subscriber numbers and profit outlook can directly impact the company's bottom line, which could influence the value and performance of its stock. Retail investors who hold Disney shares may want to reassess their investment strategy based on these developments.
Streaming Competition: Disney+'s underperformance in terms of subscriber numbers highlights the intensifying competition in the streaming industry. It emphasizes the need for retail investors to stay informed about the evolving market dynamics and how they may affect the growth prospects and profitability of companies like Disney.
Revenue Diversification: Disney's strong performance in its experiences division, including its theme parks, demonstrates the importance of revenue diversification for investors. Retail investors can gain insights into how different segments of Disney's business contribute to its overall financial health and evaluate the potential risks and rewards associated with its diversification efforts.
Long-Term Turnaround: Disney's consecutive beating of earnings expectations indicates the progress of the company's long-term turnaround plan under CEO Bob Iger. This may give investors confidence in the company's future prospects and management capabilities.
Industry Trends: The report illuminates broader industry trends, such as the impact of pricing changes on streaming platforms and the challenges traditional TV networks face in a changing media landscape. Retail investors can use this information to assess the investment potential of other companies within the entertainment and media industry.
How Can You Use This Information?
Here are some of the investing ideas that can be explored using this information:
Growth Investing
Retail investors can explore the potential growth opportunities in Disney's experiences division, particularly the theme parks segment, which has shown strong profit growth.
Growth investing focuses on stocks of companies expected to grow at an above-average rate compared to other stocks in the market; learn more in our article titled 'What is Growth Investing?'.
Innovation-Focused Investing
The report underscores the significance of innovation in the streaming industry. Retail investors may consider exploring companies at the forefront of technological advancements and disruptive innovations, similar to the streaming platforms in the entertainment and media sector.
Innovation-focused investing seeks out companies that are leaders in technological advancement, offering potential for significant growth as they develop new products and services.
Read What Others Are Saying
Reuters: Disney's surprise streaming entertainment profit offset by weaker TV business
Bloomberg: Disney Reports Lower Streaming TV Loss, Boosts Profit Outlook