Disney stock drops after disappointing earnings…
Not a great start to the week for Disney investors. The company released its third-quarter financial results yesterday, which missed Wall Street’s expectations.
After the company’s Q3 earnings were made public, Disney’s stock dropped 4% in after-hours trading.
This comes shortly after the recent success Disney’s movies have had in 2019. “Avengers: Endgame” became the highest-grossing film of all time after beating the previous record set by “Avatar.”
The success of “Avengers: Endgame,” along with titles like “Captain Marvel” and “Toy Story 4,” could set Disney up to earn more than $9 billion at the global box office in 2019.
Disney Q3 Earnings in Detail
There’s a lot to dissect in Disney’s Q3 earnings report, but here are the key points:
- Revenue: $20.25 billion
- Adjusted EPS: $1.35
- Direct-to-Consumer Revenue: $3.86 billion
- Media Networks Revenue: $6.72 billion
- Studio Entertainment Revenue: $3.84 billion
Disney blames the disappointing earnings report on the company’s ongoing efforts to integrate Fox’s entertainment assets, which Disney acquired earlier this year.
In a statement, Disney CEO and Chairman Bob Iger said, “Our third-quarter results reflect our efforts to effectively integrate the 21st Century Fox assets to enhance and advance our strategic transformation.”
Disney hopes to turn things around later this year with the release of Disney+, the company’s streaming service, as well as a number of highly-anticipated films.
Disney+ Could Turn Things Around
While Disney’s Q3 wasn’t able to match expectations, Disney+ may be able to turn things around for the entertainment company.
The streaming service, which is set to launch in November, will feature content from major studios, including Marvel, Pixar, Disney, and more.
In a call with investors on Tuesday, Iger stated, “If you compare us to Netflix, we’re going to have far less products than they do, but we’re relying on the strength of our brands and the fervor that fans of those have for the products that we make under those brand umbrellas.”
Earlier this year, Netflix reported a quarterly loss in domestic subscribers for the first time ever. This could create a pathway for Disney+ to take over a large portion of the streaming market.
In addition to the roll-out of Disney+, Disney is also releasing highly-anticipated titles such as “Frozen 2” and “Star Wars: The Rise of Skywalker” later this year.
As a result, Disney might still close out the year on a strong note, despite this disappointing quarter.
