Shares of Walt Disney Co. (DIS) are down 5% today after the entertainment giant provided
weaker-than-expected forward guidance.
The Mouse House reported subscriber gains for its flagship Disney+ streaming service that
exceeded analyst forecasts. Disney finished its fiscal second quarter with 137.7 million Disney+
subscribers globally, an increase of 33% from a year ago.
Although the quarterly gain was smaller than the growth that the service saw in the company’s
fiscal first quarter, the total beat Wall Street estimates of 134.4 million Disney+ subscribers.
Investors were expecting slower growth after Netflix (NFLX) shocked Wall Street by reporting a
surprise drop in subscribers and forecast even steeper losses in the months ahead.
That led Netflix to announce plans for a lower-priced version of its streaming service that
includes advertising.
Disney’s other streaming services, Hulu and ESPN+, posted total subscribers of 45.6 million
and 22.3 million respectively.
Disney’s earnings rose to $1.08 U.S. a share but missed the $1.17 U.S. average estimate of
analysts due to sharply higher taxes paid in international markets.
Sales in the period ended April 2 jumped to $19.2 billion U.S. but trailed the $20.1 billion U.S.
forecast on Wall Street after the company lost $1 billion U.S. in licensing revenue as it focuses
on its own streaming business.
Disney’s theme park results were strong. Earnings at the company’s resort division increased to
$1.76 billion U.S., up from a loss last year as guests returned in force to its hotels and resorts.
Among the new attractions opening in the quarter were the Star Wars Galactic Starcruiser, an
all-inclusive hotel with Star Wars characters that costs $4,800 U.S. for a two-night stay for two
people.
However, Disney executives warned during a conference call with analysts that the rate of
growth in the latter part of this year may not be as strong as hoped.
The company said that direct-to-consumer programming and production costs will increase
more than $900 million U.S. in the third quarter year-over-year.
Disney’s stock is down 32% this year at $105 U.S. per share, making it one of the biggest losers
in the Dow Jones industrial average.
