Reports earnings for the first quarter of 2021 on Thursday, Feb. 11 after close
Expected Revenue: $ 15.91 billion
EPS Forecast: – $ 0.327
The Walt Disney Co. (NYSE 🙂 is expected to report its third straight quarterly loss later in the day, as its cruise ships remain docked and theme parks are abandoned, thanks to the still-raging pandemic. Still, the stock is hovering near an all-time high, showing that investors have complete confidence in the company's turnaround in the post-pandemic world.
Disney's first-quarter earnings are expected to decline 24% to $ 15.91 billion, translating into a loss of more than $ 0.32 per share from the same period a year ago, according to the analyst consensus prediction.
But that gloomy financial picture is not what investors focus on today. They'd rather see for the video streaming business of California-based company, Disney +. On that front, the House of the Mouse has a lot of good news to share.
More than a year after its launch, Disney + had signed up 86.8 million subscribers and was taking advantage of the stay-at-home environment that forces people to seek entertainment options in their bedrooms or living rooms.
During an Investor Day presentation in December, Disney CEO Bob Chapek told investors that Disney + will have 230 million to 260 million subscribers by 2024. In comparison, when Disney + launched 13 months ago, Disney expected the platform to reach 60 to 90 million. million subscriptions by that year.
A Winner in Streaming Wars
These projections clearly show that the company is well ahead of the streaming war in which many deep-pocketed players try their luck. Netflix (NASDAQ :), the streaming business leader, told investors last month that it had more than 200 million subscribers by the end of the fourth quarter. It took Netflix more than 13 years to reach that milestone. Last month, AT&T (NYSE 🙂 said it had 41 million subscribers to its HBO Max, the Netflix-like service it launched last year.
Disney & # 39; s significant investment in its direct-to-consumer business has fueled subscriber growth with its strong drive to create new shows and movies. Chapek told investors in December that of the 100 projects the company is running, about 80% will go directly to Disney +.
The Burbank, California-based entertainment giant also plans to release more mature content on its platform to attract older audiences through its popular titles, such as "Atlanta" and "Modern Family."
However, these growth-oriented initiatives are already reflected in the company's stock price, which closed at $ 189.61 on Wednesday, after a 44% increase over the past six months. For some, Disney's valuation makes it too expensive to buy at the current level. The company's losses, rising long-term debt, and the dividend suspension are some of the factors that keep some investors on the sidelines.
Bottom Line
Disney, with its major revenue-generating units still under pressure, is betting on the reopening of the economy and the success of its streaming business. These two catalysts are highly reflected in the stock price, making it more difficult for the stock to continue to perform strongly from here. Investors, in our opinion, should wait on the sidelines for a better entry point.
