Walt Disney (DIS) shares surged higher Thursday after the media and entertainment group blasted Street earnings forecasts, unveiled new pricing structures for its direct-to-consumer platforms and overtook Netflix (NFLX) as the world's biggest streaming service.
The group clipped its near-term subscriber growth forecast, however, noting that its decision to walk away from a bidding war for Indian cricket rights will likely mute additions for its Disney+ Hotstar division. Still, the company sees core Disney+ subscribers of between 135 million and 165 million by September of 2024, with an overall total of between 215 million and 245 million.
For the three months ending in June, Disney added a impressive 14.4 million new Disney+ subscribers -- compared to a loss of 970,000 for Netflix -- taking its overall 'family' total, including EPSN and Hulu, to 221.1 million.
Disney also unveiled price increases for both is main streaming platform, which will rise by $3 to $10.99 per user, and pegged the cost of new ad-supported platform, which launches on December 8, at $7.99 per user.
Earlier this month, Disney also boosted the price of its ESPN+ sports streaming service by $3, to $9.99 per user, and said Wednesday it will hike prices for its Hulu entertainment platform as well.
"We believe because the increase in the investment over the past two and a half years relative to a very good price point that we have plenty of room on price value," CEO Bob Chapek told investors on a conference call late Wednesday. "And we do not believe that there's going to be any meaningful long-term impact on our churn as a result."
Walt Disney shares were marked 7.7% higher in early Thursday trading to change hands at $120.95 each.
Earnings for Disney's third quarter were up 36.2% from last year to a Street-beating $1.09 per share while revenues surged 26% to $21.5 billion.
Parks and Experiences revenues came in at $7.4 billion, topping the Street's estimate and rising more than 70% from last year as visitors returned to re-open resorts and cruises around the world, particularly in Hong Kong and the United States.
"We continue to see Disney as the only asset we want to own in Media given the platform of direct-to-consumer products, relatively strong linear brands, and ability to tie content and experiences together with Parks," said KeyBanc Capital Markets analyst Brandon Nispel, who boosted his price target on Disney stock by $23, to $154 per share, following last night's earnings.
"That should result in revenue and operating income growth that is among the fastest in our coverage for the next several years," he added.
