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Walt Disney shares rise after entertainment giant's Q1 earnings beat estimates

Published 02/07/2024, 04:19 PM
Updated 02/08/2024, 07:29 AM
© Reuters

Investing.com -- Shares in Walt Disney rose on Thursday after the entertainment giant posted fiscal first-quarter results that topped Wall estimates thanks in part to cost cuts.

The results come as Disney faces a proxy battle from activist investors keen on gaining board seats in order to institute strategic changes that they believe will help boost the company's share price. Yet Disney Chief Executive Bob Iger struck a bullish tone in the wake of the release, saying the numbers showed that the business had "turned the corner and entered a new era."

Walt Disney (NYSE:DIS) reported adjusted earnings per share (EPS) of $1.22 on revenue of $23.55 billion in the three months ended on Dec. 30. Analysts polled by Investing.com anticipated EPS of $1 on revenue of $23.75. Disney also increased its quarterly dividend by 50% to $0.45 a share.

The company noted that a cost reduction plan had led to over $500 million in savings across the enterprise in the first quarter, with Disney saying it remains on track to exceed its $7.5 billion annualized savings target by the end of fiscal 2024.

Meanwhile, its lucrative parks business reported a 7% jump in revenue to $9.13B. 

Core paid subscribers to its Disney+ streaming service fell 1% sequentially to 111.3M in Q1, though average revenue per user rose 2% to $6.84 amid subscription price hikes. Disney+ subscribers fell to 146.1 million, missing estimates of 151.1 million, pressured by a 24% fall in Disney+ Hotstar subscribers. However, the firm said it was on pace to hit its target of achieving profitablity at its key streaming business by this autumn.

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Disney has focused heavily on building out its streaming offerings, particularly as it faces heavy competition to attract cord-cutting viewers. This week, the group announced that its ESPN business would team up with Fox Corp., and Warner Bros. Discovery (NASDAQ:WBD) to launch a sports streaming service later this year. 

The new sports service could be a "game changer", said Don Montanaro, President of Firstrade, in an email on Wednesday to Investing.com. 

"The last frontier for streaming, we're seeing more and more OTT providers capitalize on what could be a paradigm shift in the pay-TV and cable industries. If they follow a smart and data-driven approach, I believe Disney can ultimately get it right on streaming," Montanaro added.

Looking ahead, Disney said it now expects adjusted full-year fiscal 2024 EPS to increase by at least 20% compared with 2023, to approximately $4.60. 

For its current quarter, Disney+ is forecast to rack up core subscriber net additions of between 5.5 million and 6 million, the company said,

Disney also announced that it had taken a $1.5 billion stake in "Fortnite"-maker Epic Games, marking one of the company's biggest-ever forays into the gaming space. It also revealed that Taylor Swift’s filmed Eras Tour would be available on Disney+ on Mar. 15. 

Scott Kanowsky contributed to this report.

Latest comments

I can’t help but wonder, if Warren Buffett would pay $35 for parking and a $185 day ticket per person to go to Disney in the early days.
Consumer spending is a key driver of economic growth.
Blockchain technology is disrupting traditional finance.
Negative revenues, lower subscription are not relevant .....just increase the guidance 🐂💩.and the shares will rally.......
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