So far, this earnings season has been one of the best in recent memory. The majority of companies, especially those listed on major exchanges such as the S&P 500, have been beating Wall Street’s expectations. Whether that means Wall Street has been too pessimistic or that companies have already recovered, the fact remains that the stock market is doing incredibly well right now, in contrast to the economy. However, there are a few companies that are still struggling with the after-effects and the ongoing restrictions from COVID-19.
Walt Disney (NYSE: DIS) is one of those companies. With its Disneyland locations all but shut down, the company is just barely making a profit thanks to its Disney+ streaming service. While its $17 million quarterly profit wasn’t that great, it still managed to beat Wall Street analyst expectations, which were already incredibly bearish going into 2021.
Compared to last year prior to COVID-19, Disney’s quarterly profit came in at around $2.1 billion. With movie theatres largely shutdown and Disneyland closed, the only thing keeping Disney from losing money is its fast-growing streaming business.
For the last three months of 2020, Disney+ added an extra 21 million new subscribers, bringing the total up to around 94.9 million. While that’s still a far cry from other streaming services, such as Netflix, if this fast growth continues for Disney+, it could end up becoming a legitimate contender with these larger service providers.
Back in October, Disney CEO Bob Chapek talked about how Disney was going to transition into becoming more of a streaming company while transitioning out of its older, legacy businesses. Whether or not this is going to be a successful transition in the long term remains to be seen.
“We’re confident that, with our robust pipeline of exceptional, high-quality content and the upcoming launch of our new Star-branded international general entertainment offering, we are well-positioned to achieve even greater success going forward,” said Chapek in an official statement on February 11th, 2021.
While Disney did end up beating expectations, after all, shares aren’t really moving that much in response to the news. Disney’s stock is up around 2.5% in pre-market trading right now, while over the past 12 months, the stock has gained only 25%. That’s far from great, especially in comparison to other companies in the streaming world, such as Netflix.
Disney Company Profile
Walt Disney owns the rights to some of the most globally recognized characters, from Mickey Mouse to Luke Skywalker. These characters and others are featured in several Disney theme parks around the world. Disney makes live-action and animated films under studios such as Pixar, Marvel, and Lucasfilm and also operates media networks including ESPN and several TV production studios. Disney recently reorganized into four segments with one new segment: direct-to-consumer and international. The new segment includes the two announced OTT offerings, ESPN+ and the Disney SVOD service. The plan also combines two segments, parks and resorts and consumer products, into one. The media networks group contains the U.S. cable channels and ABC. The studio segment holds the movie production assets. – Warrior Trading News
