Disney Q1 earnings report: ‘this stock is unmatched anywhere else’

Walt Disney Co (NYSE: DIS) is trading up in extended hours even though subscriber count at its flagship streaming service dropped more than expected in its fiscal first quarter.

Why is Disney stock up in after-hours?

The stock seems to be responding to strength in theme parks that helped both profit and revenue come in ahead of Street expectations.

Shareholders are happy also because the entertainment behemoth revealed plans of eliminating 7,000 jobs worldwide. All in all, it wants to lower costs by $5.50 billion.

CEO Bob Iger is also reorganizing Disney into three core businesses:

Disney Entertainment


Parks, Experiences and Products

Wall Street currently recommends that you buy Disney stock.

Here’s how Disney+ did in Q1

Disney+ lost 2.4 million subscribers this quarter, suggesting increased price for its ad-free tier did alienate some viewers. Experts had forecast a loss of 1.52 million subscribers in Q1 instead. Reacting to it, Sand Hill’s Brenda Vingiello said on CNBC’s “Closing Bell: Overtime”:

I think things are actually a little bit better than we thought. We got confirmation that their fiscal Q4 was potentially the peak in loss for the streaming business, which is great news.

The streaming service that directly rivals Netflix now has 161.8 million subscribers in total.

It’s important to note here that Disney itself had expected to 3.0 million subscribers this quarter. Reiterating her bullish view on the stock, Vingiello added:

We own the Disney stock because it’s unmatched anywhere else. I think ultimately Wall Street will reward the company for that.

Expert’s take on Walt Disney Co

Media and entertainment distribution brought in $14.78 billion in the first quarter while direct-to-consumer sales stood at $5.3 billion – both missing estimates. Still, Key Financial’s Patti Brennan said on CNBC:

Disney has pricing power. The fact that they didn’t lose anybody in spite of $3.0/month increase is really telling to me. Bob Iger is not wasting time. They’ll refigure this business model. They’re returning to profitability one way or the other.

On the flip side, theme parks, experiences, and product generated $8.74 billion in revenue, which was well above expectations. Disney stock is now up nearly 25% for the year.

Notable figures in Disney’s Q1 earnings report

Net income printed at $1.28 billion versus the year-ago $1.15 billion

Per-share earnings also climbed year-over-year to 70 cents

Adjusted EPS came in at 99 cents as per the earnings press release

Revenue noted an annualised growth of 8.0% to $23.51 billion

Consensus was 78 cents of adjusted EPS on $23.44 billion revenue

Other notable figures include $7.29 billion sales from television networks and $2.46 billion from content and licensing, also falling shy of FactSet consensus. Disney’s quarterly update comes at a time when it’s in a proxy fight with the billionaire activist investor Nelson Peltz (source).

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