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Disney+ Subscriptions Blow Past Views But Disney Earnings, Sales Miss

By APARNA NARAYANAN

Walt Disney missed earnings and sales estimates for its fiscal second quarter. But Disney+ subscriber growth blew past Wall Street expectations. Disney stock fell a fraction Thursday.

In the last couple years, the Dow Jones media and entertainment conglomerate made a pivot to online video streaming, launching the Disney+ service, a rival to Netflix.

Disney+ added 7.5 million subscribers in Q2, while Netflix struggles. Other parts of Disney's vast operations had a more challenging quarter.

Despite easing of pandemic restrictions, Covid-19 continues to impact operations across international parks and resorts, cruise ships, and film and TV productions "depending on local circumstances," Disney said late Wednesday.

Disney's Shanghai resort temporarily closed in March and April amid a fresh Covid wave.

IBD Live: A New Tool For Daily Stock Market Analysis

Disney Earnings

Estimates: Analysts polled by FactSet expected Disney earnings to jump 50% year over year to $1.19 per share. Revenue was seen rebounding 28% to $20.061 billion.

They see Disney+ subscribers reaching 135 million, up by more than 5 million from Q1's 129.8 million subscribers.

Results: Disney earnings rose 37% to $1.08 per share, missing views. Revenue climbed 23% to $19.249 billion, also falling short.

Disney+ subscribers reached 137.7 million in Q2, a gain of more than 7.9 million from Q1. The subscriber count across all of Disney's streaming channels reached 205 million.

Theme park revenue more than doubled, year over year, to $6.65 billion. Revenue rose 9% in the media and entertainment segment, including 23% for streaming services.  But streaming or "direct to consumer" losses also increased in Q2, with the buildout of Disney+ and ESPN+ both weighing on results.

Disney said it would boost content costs by $900 million in fiscal Q3 vs. a year earlier.

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Disney Stock

The Dow Jones giant fell 0.8% to 104.33 on the stock market today. Disney stock is angling toward an eighth straight weekly decline, trading at its lowest level since May 2020.

Disney+ Vs. Netflix

The growth of Disney+, which launched November 2019, continues to hit its archrival. The Disney+ Q2 subscriber tally is more than half Netflix's Q1 total of 221.6 million subscribers. NFLX surprised analysts by losing 200,000 subscribers in its latest quarter instead of adding 2.5 million subscribers as expected.

Streaming giants face multiple headwinds — competition, inflation, the Russia-Ukraine war and subscription fatigue. Apple, Amazon and Warner Bros. offer rival streaming services.

Both Disney and Netflix now plan ad-supported versions. Disney also owns Hulu and ESPN.

Disney's vast portfolio of businesses includes movies, theme parks, hotels, cruise lines and consumer products.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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Dive Deeper:
Disney Q2 Earnings Highlights: Parks Segment Up 110%, Disney+ Hits 137.7M Subs And More
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