Disney (DIS) Stock Dips Despite Surpassing Earnings Expectations and Boosting Streaming Revenue

• Disney reported a 30% increase in adjusted earnings, to $1.21 per share, and a 1% rise in revenue to $22.08 billion in its Q2 results.
• The entertainment giant’s streaming revenue jumped 13% to $5.64 billion, driven by an increase in subscribers and average monthly subscription price.
• Disney raised its full-year adjusted earnings outlook to 25% growth, up from the previously expected 20%.

Disney’s Q2 results show improved streaming financials and an updated earnings guidance, despite falling short of revenue forecasts.

Disney’s Q2 Earnings Overview

Disney (DIS) reported a 30% increase in adjusted earnings, to $1.21 per share, marking a second straight quarter of slowing growth. Revenue rose 1% to $22.08 billion. The results cleared FactSet earnings expectations of $1.10 per share but fell just short of the revenue forecast of $22.12 billion. Disney+ subscribership increased to 153.6 million for the quarter, up from 149.6 million in Q1 but down from 157.8 million last year. FactSet expected 154.5 million subscribers for the quarter.

Streaming Revenue and Subscribership

Entertainment streaming revenue jumped 13% to $5.64 billion, driven by an increase in subscribers and average monthly subscription price. Disney’s direct-to-consumer entertainment business reported operating income of $47 million for the quarter, compared to a loss of $587 million last year. Combined direct-to-consumer revenue for Disney’s entertainment and sports segments jumped 12% to $6.12 billion. Combined direct-to-consumer operating losses narrowed to $18 million from $659 million last year.

Sports and Streaming Deal Discussions

Meanwhile, grocery chain Kroger (KR) is in discussions to offer Disney+ to paying members of its Kroger Boost delivery program. If the deal goes through, Kroger Boost members would have access to Disney’s streaming service this year at no additional cost. Elsewhere, Disney is expected to pay an average annual fee of $2.6 billion to renew its deal with the NBA, up from its current fee of $1.5 billion.

Feuds Settled

Disney at the beginning of April won its “distracting” proxy board battle against Trian Fund Management and Blackwells Capital during its annual shareholder meeting. Nelson Peltz’s Trian firm and Blackwells had campaigned for influence over the board. Trian sought to place Peltz on the board, along with former Disney CFO Jay Rasulo.

Disney Stock Performance

DIS stock fell 8.3% at the open Tuesday, dropping back below the 50-day moving average. Shares swung 2.5% higher to 116.47 on Monday to push back above the line. The stock is trading tightly in the bottom half of a five-week flat base with a 123.74 buy point, according to MarketSurge charts. Disney stock is the Dow Jones leader in 2024, up 29% through Monday.

Conclusion

Despite falling short of revenue forecasts, Disney’s Q2 results show improved streaming financials and an updated earnings guidance. The entertainment giant’s stock performance remains strong, leading the Dow Jones in 2024.