Walt Disney earnings preview - U.S. theme parks should be a source of strength, but magic wand may be needed to clear up other issues (107.05 -0.63)
After the close, Walt Disney (DIS) is scheduled to report Q2 results with a conference call following at 4:30 p.m. ET. The company's results are expected to be released at 4:05 ET. For the quarter, DIS is expected to post EPS and revenue of $1.16 and $82.77 bln, respectively. Historically, DIS does not provide specific EPS or revenue guidance.
Heading into the print, the stock has been cratering, plunging by nearly 30% since DIS last reported earnings on February 9. That Q1 report was quite strong with DIS blowing out top and bottom-line estimates, but a lot has happened since then to swing sentiment in a bearish manner.
When Netflix (NFLX) reported disappointing Q1 results on April 20, including a surprising decline in subscribers, shockwaves were sent across the entire streaming industry. NFLX acknowledged that the pandemic caused a pull-forward in demand, while also admitting that an increasingly competitive market is having a negative impact.
It's important to note, though, that NFLX also had a rough Q4, sparking fears that Disney+ experienced a slowdown last quarter. Ultimately, DIS pleasantly surprised investors as Disney+ added 11.8 mln subscribers in Q1 for a total of 130 mln. CEO Bob Chapek also reaffirmed guidance that DIS will attain 230-260 mln Disney+ subscribers by the end of FY24.
The divergence in performance between Disney+ and NFLX highlights one of DIS's key competitive advantages: namely, its portfolio of iconic franchises (Star Wars, Marvel, Pixar, etc.) to draw content from.
