by SignalFactory · February 4, 2020 | 08:12:50 UTC
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.
Movie Studio
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.
Theme Parks
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.
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