Shares of Walt Disney Co (NYSE: DIS) lost as much as 10% in extended trading after the entertainment conglomerate said it missed both on top and the bottom line in its fourth financial quarter.
On the plus side, though, Disney+ added a whopping 12.1 million new subscribers this quarter – way more than 10.4 million that Street had expected. Including Hulu and ESPN, Disney now has over 235 million subscribers in total.
More importantly, Disney reiterated that its direct-to-consumer business will be profitable in fiscal 2024. In the earnings press release, CEO Bob Chapek said:
By realigning costs, we’ll be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future.
Disney+ is scheduled to launch a cheaper, ad-supported tier on December 8th. That is expected to help with the push to profitability as well.
For now, though, average revenue per subscriber was down 5.0% globally and 10% in North America. DTC lost $1.50 billion this quarter (more than 100% YoY) versus $1.10 billion expected.
For the year, Disney stock is now down more than 40%.
“Media & Entertainment Distribution” and “Parks, Experiences & Products” – both segments came in shy of Street estimates in Q4. You can read the full earnings report here.
Also a negative was the future outlook.
On the earnings call, CFO Christine McCarthy said both revenue and operating income were expected to growth at a “high-single-digit percentage rate” in fiscal 2023. That compared to analysts at 14% and 18%, respectively.
Despite challenges, though, the sell-off might be an opportunity to buy Disney stock considering the Wall Street continues to see upside in it to $137 on average. That’s up 50% from here.
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