Disney disappoints in sales – Disney shares under pressure

The US entertainment giant Walt Disney did worse than expected in the most recent fiscal quarter – especially in the important streaming business.

In the three months to the beginning of October, revenues grew by 26 percent compared to the previous year’s period, which was heavily burdened by the Corona crisis, to 18.5 billion dollars (16.1 billion euros), as the group announced on Wednesday after the US stock market closed. Experts had expected higher revenues.

Disney’s quarterly profit was also relatively modest with a bottom line of $ 159 million. A year ago, the balance sheet showed a loss of 710 million dollars, but now Disney’s amusement parks and holiday complexes, which have now been closed due to the pandemic, are back in operation. The streaming business for the Disney + video service was a particular disappointment for investors. In view of the lack of film and series hits, only 2.1 million subscriptions were added – significantly fewer than expected.

Disney + started out as a Netflix hunter around two years ago, and grew rapidly thanks to successful shows such as “The Mandalorian” from the “Star Wars” universe. But in the end it didn’t go so smoothly. At the end of the quarter, Disney + had 118 million paying users worldwide, keeping Netflix a long way off. The market leader in the streaming business had increased its number of subscribers in the most recent quarter by around 4.4 million to a total of almost 214 million.

Disney admitted that the business continues to suffer from the consequences of the Corona crisis. Production delays and fewer premieres limited the availability of film content. Meanwhile, lower advertising income and falling customer interest are burdening the classic cable TV division. These include the sports broadcaster ESPN, which is very important for the group but has been suffering from subscriptions for a long time. Disney’s theme parks recorded strong growth, albeit based on the previous year’s very weak level due to the Corona crisis.

Disappointment with streaming subscriptions: Disney shares collapse

Disappointing growth in the major streaming business weighed heavily on entertainment company Walt Disney’s stocks on Thursday. The shares fell to an eleven-month low of $ 158.33 in early trading. Most recently they were lagging behind in the US leading index Dow Jones Industrial with minus 8.36 percent to 159.87 dollars.

In the streaming business for the Disney + video service, only 2.1 million subscriptions were added due to the lack of film and series hits – significantly fewer than expected. After the streaming growth has been exceptional so far, Disney is now feeling the burden of high investor expectations, said analyst Sophie Lund-Yates of asset manager Hargreaves Lansdown.

Analyst Alexia Quadrani from the US bank JPMorgan emphasized in a study that the growth in the number of subscribers has decreased, but Disney has confirmed its annual targets for this. In addition, the management now wants to put more money into broadcast content. Against this background, the expert remains optimistic. Although it lowered its target price from $ 230 to $ 220, it still sees plenty of room for improvement and continues to rate the shares as “Overweight”.

How quickly stocks can rebound remains to be seen. From a technical chart point of view, the picture clouded over on Thursday. The price fell below the 21, 50 and 200-day lines. These average prices are used by technically oriented investors as indicators of the short to long-term trend.



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