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Disney’s Q1 Earnings Are Out: Here’s Why Investors Need Not Panic

Despite several quarters of promise, bolstered by incredible streaming results, Disney proved that this pandemic is far from over in Q1.

Reminiscent of last month’s disappointing Netflix Q1 earnings, Disney (NYSE: DIS)missed out on streaming subscribers. 

But perhaps it’s time for investors to take a line from ‘Frozen’s’ Elsa and “let it go”. 

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“What do you mean by ‘it’?

The ‘it’ I’m referring to is the short-term mindset that causes panic selling following earnings reports that don’t go exactly as predicted — such as Disney’s last night. 

  • EPS: $0.79 v.s. $0.27 expected, or $901 million in profit. Did you think, this time last year, that Disney would manage to pull off a profit 12 months into a pandemic that ravaged its business? Me neither.
  • Revenue: $15.61 billion b.s. $15.87 billion. A marginal miss considering the majority of its parks and cruises are still closed or operating at reduced capacity. 
  • Disney+ subscribers: 103.6 million v.s. 109 million.

First off, prior to launching in 2019, Disney predicted that it would reach between 60 to 90 million subscribers by the end of 2024. Insanely, in less than half that time, it is already over 100 million! Sure, many subscribers have been pulled forward due to pandemic-related boredom, but it’s still no mean feat. And, the company remains adamant in its revised projections of between 230 million to 260 million subscribers worldwide by 2024. It’s no surprise then to see that Disney’s direct-to-consumer business grew 59% year-over-year to $4 billion, helping to offset losses elsewhere. 

Disney still has a long way to go before fully reopening, but CDC guidelines yesterday declaring that outdoor and indoor mask-wearing was now unnecessary for vaccinated people will be a welcome boost to business. Before panic selling because of its streaming service, appreciate how well Disney has weathered this pandemic and how big it will be once it has passed.

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.

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