Disney stock lately has been behaving more like Netflix stock, which often moves more on subscriber numbers than earnings. Last year, much of the gains for Disney stock came in April after it teased all the content that would be available on Disney+ and on Nov. 13, when Disney reported 10 million sign-ups for Disney+ a day after it launched.
Disney+ Is A Big Minus For Disney Earnings
Walt Disney has promised a Disney+ subscriber update along with Q1 earnings results, and analysts expect subscriber updates on the earnings call for Disney’s other streaming services, ESPN+ and Hulu. Wall Street firms and mobile analytics firms have been issuing increasingly bullish estimates on app downloads and user growth.
JPMorgan analyst Alexia Quadrani wrote Jan. 24 that she sees 20 million Disney+ subscribers in Q1 while rating Disney stock at overweight. On Jan. 1, Rosenblatt Securities estimated 25 million Disney+ subscribers by the end Q1, up from a prior view of 21 million. In November, Rosenblatt said, “Disney+ should take the wheel in determining the trajectory” of Disney stock.
But Disney’s streaming investments and its Fox integration are seen weighing on the bottom line. In Q1, Walt Disney estimates the direct-to-consumer segment will post an operating loss of $800 million. It anticipates profitability for Disney+, Hulu and ESPN+ in 2023-2024.
Meanwhile, Hulu CEO Randy Freer is exiting as Disney integrates the service more closely with the rest of its video streaming business. Hulu was part of Disney’s acquisition of 21st Century Fox media assets.
Walt Disney’s movie studios are likely to underpin Q1 results. Massive blockbusters in the quarter included “Frozen 2” and “Star Wars: The Rise of Skywalker.”
The “Star Wars” movie had a relatively weak open and earned tepid reviews, yet went on to surpass $1 billion at the global box office. The sequel to 2013’s animated hit “Frozen” earned $1.42 billion, outpacing its predecessor’s $1.28 billion.
For Q1, Disney expects “Frozen 2” to offset weakness at Fox studios. The Fox acquisition has dragged on recent Disney earnings.
Disney theme parks in China will feel the impact of Hong Kong unrest in Q1, while subsequent results will see the effect of the coronavirus outbreak. Also, both Shanghai Disneyland and Hong Kong Disneyland are closed due to coronavirus.
The Shanghai Disneyland was closed Jan. 25, during the busy Lunar New Year holiday, as the deadly virus spread. That added to challenges from anti-government protests in Hong Kong, which Disney estimates will dent Q1 parks income by about $80 million.
Domestically, Walt Disney opened the new Rise of the Resistance ride at Star Wars: Galaxy’s Edge in Florida late in Q1. The ride opened in Disneyland last month. Investors will look for signs the new attraction is boosting domestic parks attendance, after a lackluster open for the ride in the prior quarter.
Disney has already had a huge dip. Buy now. The company will generate billions $$$ off Disney plus or the ESPN, Hulu package. They have not even started Offering Disney plus in Europe. Which will add another 60 million subscribers by June? The Chinese people will all take their kids to Disney parks once the fear of Coronavirus gets figured out. Nobody panics selling their stocks when the USA has 150,000 people die every year from pneumonia or the flu yet you all freak out over 400 deaths from China virus. Disney should fly a lot higher especially with more great movies killing sales.
Disney LONG (Buy)
Enter at: 142.31