Disney easily beat Wall Street targets for fiscal third-quarter earnings, revenue and subscribers late Wednesday. The Dow Jones media and entertainment giant also announced plans for an ad-supported Disney+, with a 38% price hike for the ad-free version. Disney stock jumped overnight.
Disney Earnings
Disney earnings rose 36% vs. a year earlier to $1.09 a share. Revenue grew 26% to $21.5 billion. Wall Street expected Disney earnings of 98 cents a share on $20.99 billion in sales.
The company added 14.4 million new Disney+ subscribers during the period, bringing the total to 152.1 million. Analysts expected Disney+ subscribers reaching 147.9 million for Q3. Disney's total numbers across all its streaming channels, including Hulu and ESPN+, hit 221 million, well above expectations of 217.82 million.
Disney theme parks starting to get their magic back. Revenue jumped 70% over the year to $7.39 billion in the third quarter, even while Covid still impacts its tourism business. The Shanghai Disney Resort was only open three days during the quarter due to additional pandemic restrictions in China. Disney's park revenue also more-than-doubled in Q2 to $6.65 billion.
Sights On Streaming
The company behind the world's most famous mouse has very ambitious targets for its Disney+ subscriber numbers. It competes with Netflix, Apple, Comcast and Paramount Global for streaming dominance.
But those targets are becoming slightly less ambitious. Disney is now targeting 215 million to 245 million Disney+ subscribers by the end of 2024, down from its February forecast of 230 million to 260 million
After CEO Bob Chapek announced its target in February, the company blew away estimates for second-quarter subscriber growth, despite missing earnings and sales forecasts.
The Dow giant still expects Disney+ to be profitable in 2024.
In fiscal Q2, Disney said it would spend $900 million more on content for the third quarter compared to a year earlier. The third quarter operating loss from direct-to-consumer streaming leapt to $1.1 billion from $0.8 billion last year. Disney says the larger loss is primarily due to higher programming, production and marketing costs during the period.
In the company's earnings call, CFO Christine McCarthy says she anticipates content sales and third-party content licensing will continue to face headwinds in the fourth quarter. Disney now expects cash content spending to total $30 billion across the company for 2022, and will remain in the low $30 billion range "over the next couple of years," McCarthy says.
However, Disney+ will soon cost $10.99 a month, a 38% increase. On December 8, Disney+ will launch a cheaper ad-supported tier as well as a slate of subscription plans across its streaming channels. Netflix also is moving toward an ad-supported tier.
DIS Stock Analysis
Disney stock rose nearly 7% in overnight trade. Shares rose 4% to 112.43 in Wednesday's regular session.
Disney stock is climbing off a mid-July low, working on its fourth straight weekly advance. It's still well off its March 2021 high of 203.02
IBD Stock Checkup gives a Disney a 50 Composite Rating out of a possible 99. The composite rating combines key fundamental and technical metrics in a single score. Disney ranks 11th in the 20-stock Media-Diversified group, based on that rating.
DIS stock's 71 Earnings Per Share Rating reflects its three-year earnings growth rate of -35%.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
You Might Also Like:
See Stocks On The List Of Leaders Near A Buy Point
Short-Term Trades Can Add Up To Big Profits. IBD's SwingTrader Shows You How
Watch IBD's Investing Strategies Show For Actionable Market Insights
Market Rally Enters Power Trend; These EV Plays Flash Buy Signals
