The Walt Disney Company (NYSE: DIS) stock plummeted about 10% in intraday trading Tuesday amid concerns over a weaker fiscal third-quarter outlook. Despite an unexpected profit in its direct-to-consumer entertainment division, the company’s overall second-quarter report showed a net loss, fueling investor worries.
Disney (DIS) has reported total revenue of $22.08 billion for the latest quarter, a slight increase from last year’s figure of $21.82 billion, aligning with estimates compiled by Visible Alpha. However, the company recorded a net loss of $20 million, or 1 cent per share, primarily due to several goodwill impairment charges. This outcome contrasts sharply with the anticipated profit of $1.96 billion, or $1.09 per share.
After adjusting for one-time charges, Disney reported adjusted earnings per share (EPS) of $1.21, surpassing estimates of $1.10.
Disney reported an operating profit of $47 million in its direct-to-consumer entertainment segment, encompassing Disney+ and Hulu, significantly better than the anticipated $119.8 million loss analysts had predicted and a substantial improvement from the $587 million loss reported last year.
However, Disney recorded an overall streaming loss of $18 million, with ESPN+ continuing to exert downward pressure. However, the loss was considerably smaller than the $659 million reported last year.
Disney’s CEO Bob Iger expressed optimism, stating that the company’s turnaround and growth initiatives initiated last year have continued to yield positive results. He noted,
“We have some highly anticipated theatrical releases arriving over the next few months; our television shows are resonating with audiences and critics alike; ESPN continues to break ratings records as we further its evolution into the preeminent digital sports platform; and we are turbocharging growth in our Experiences business with several near- and long-term strategic investments.”
Q3 Outlook Weakness Sparks Concerns
However, Disney cautioned investors on its earnings call, indicating that it does not foresee significant core Disney+ subscriber growth in the current quarter. In addition, Disney hinted at potential challenges in achieving streaming profitability, citing expenses for cricket rights in India as a factor.
Moreover, the company noted that operating income for its experiences segment, which drove revenue growth in the second quarter, is expected to remain relatively unchanged in the third quarter compared to the previous year.
Disney (NYSE: DIS) Stock Movement
DIS stock plunged 9.51% to close at $105.39 on Tuesday. Its value decreased by 5.14% this week. Trading activity has witnessed 55,084,616 (55.08 million) shares changing hands, well above the average daily volume of 11.84 million.
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