Disney (NYSE:DIS) stock is one of today’s top trending names for mixed reasons. The family entertainment conglomerate has been volatile since markets opened as both positive and negative headlines trend.
For one, Disney+, the streaming arm of the company, managed to turn a profit for the first time since launching in 2019. But Disney has also reported weaker-than-expected results for its theme parks, which suggests that the industry may be in trouble. This type of day tends to leave investors with questions about where DIS stock will go from here. As InvestorPlace contributor Yiannis Zourmpanos reports:
“In Disney’s streaming business, especially entertainment, achieving profitability is crucial. The addition of 6.3 million Disney+ subscribers shows strong demand. The increase in average revenue per user by $0.44 shows effective monetization. Strategies like price hikes and premium tiers drive this growth. Moreover, the streaming business is at the core of Disney’s future profitability, with content production central to its growth.”
While Disney+ is helping drive growth, Disney’s recent earnings report raises some red flags regarding the company’s future as DIS stock continues to struggle. Let’s take a closer look at what investors need to know about the firm’s current outlook.
DIS Stock Today: What to Know
It’s true that Disney recently reported third-quarter earnings and beat Wall Street estimates on both revenue and EPS. That’s likely part of what has boosted DIS stock so far today.
In the three months that ended on June 30, Disney saw operating income from its streaming services surge 108%, reaching $42 million. On top of that, the company highlighted a slight year-over-year (YOY) bump in paid subscriptions for both Disney+ and Hulu.
However, the declining revenue from Disney’s parks business suggests that darker days may lie ahead. As The New York Times reports, while “revenue increased 2 percent from a year earlier, to $8.4 billion […] operating profit declined 3 percent, to $2.2 billion.”
Disney has attributed these problems to “moderation of consumer demand.” That is likely due to the years of inflation many families have faced and are still recovering from.
The positive streaming news also comes a few days after Disney reported plans to lay off 140 employees from some of its other networks, such as NatGEO and Freeform.
DIS stock is currently down more than 2% for the day following an early morning attempt at a rally. The current trajectory suggests shares will continue to trend downward today.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
