- Walt Disney Co. shares experienced a significant drop of over 9% on Tuesday morning after the company announced its quarterly financial results and forecasts for the current quarter.
- The company’s direct-to-consumer business, including Disney and Hulu, posted a quarterly operating income of $47 million, a significant improvement from a loss of $587 million a year earlier.
- Despite the stock tumble, Disney’s chief executive officer Bob Iger expressed optimism about the company’s turnaround and growth initiatives.
Walt Disney Co. shares tumble following quarterly financial results announcement, yet the company’s direct-to-consumer business shows significant improvement.
Disney Shares Take a Hit
On Tuesday morning, Walt Disney Co. shares took a significant hit, tumbling more than 9% in New York. This followed the media giant’s announcement of its quarterly financial results and forecasts for the current quarter. By 11:48 a.m. EDT, the Walt Disney stock was at $104.90, lower by 9.93%.
Improvement in Direct-to-Consumer Business
Despite the stock tumble, there were positive aspects in Disney’s financial results. The direct-to-consumer business, which includes Disney and Hulu, posted a quarterly operating income of $47 million. This is a significant improvement compared to a loss of $587 million a year earlier. Revenue for this segment rose 13% to $5.64 billion. The combined streaming businesses, including Disney, Hulu, and ESPN, saw their second-quarter operating loss shrink to $18 million from $659 million. Revenue improved to $6.19 billion from $5.51 billion.
Subscriber Growth and Future Plans
The company added more than 6 million subscribers in the second quarter to its Disney streaming platform. However, Disney’s chief financial officer Hugh Johnston stated that the company doesn’t expect to see core Disney subscriber growth in the current quarter. The company is planning to add an ESPN tab to Disney by the end of the year. Despite the challenges, Disney’s theme parks registered revenue growth of 10% in the second quarter, and the segment posted a 12% gain in operating income.
Conclusion
Despite the tumble in shares, Walt Disney Co. has shown significant improvement in its direct-to-consumer business. The company’s streaming services have seen a reduction in operating loss and an increase in revenue. However, the path to long-term profitability is not linear, and the company expects challenges in the current quarter. The company remains optimistic about its growth initiatives and plans to continue expanding its streaming services.
