3 big earnings hits: Disney falls down; Airbnb warns; PayPal 'may be stuck'
Investing.com -- Here is your Pro Recap of the biggest earnings reports you may have missed this week: disappointment at Disney , a warning from Airbnb, and soft guidance at PayPal.
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Disney stumbles on tepid subscriber numbers
Walt Disney (NYSE:DIS) shares fell about 5% on Thursday after the entertainment behemoth reported below-par earnings of $0.93 per share and 157.8 million Disney+ subscribers, fewer than the 163.1M that Wall Street had expected.
Still, Citi highlighted that losses continue to narrow:
We believe the lower F2Q23 subscribers and improved DTC profitability are likely a result of the company’s price hikes taken in December. Given the segment operating income beat and narrowing of DTC losses, we would not be surprised if shares traded modestly higher tomorrow.
Goldman Sachs cut the price target to $130 per share, from the prior $136, but remains Buy-rated on DIS stock:
Our key positive takeaway from DIS’s F2Q23 results is that we believe management is showing solid execution against key profitability initiatives outlined last quarter... Our key negative takeaway is that DIS continues to confront both secular and cyclical headwinds, which may yield lumpy operating trends including during 2H.
Airbnb warns of slowing growth
Airbnb (NASDAQ:ABNB) said it made $0.18 a share - a swing from last year's loss but also $0.02 shy of Street expectations - on in-line revenue of $1.8 billion. The company also announced a new share buyback program of up to $2.5B.
Looking ahead to Q2, the company guided revenue in a range of $2.35B to $2.45B, in line with Wall Street estimates, but also said Night and Experiences Booked "will have unfavorable year-over-year comparisons in Q2 2023 as we overlap pent-up 2022 demand following the COVID Omicron variant."
After that, the shares took a quick fall. Morgan Stanley cut the price target to $95 per share and reiterated an Underweight rating on ABNB stock, as InvestingPro reported in real time:
Slower-than-expected forward room night growth (US facing pricing and supply constraints) speak to how forward growth (more reliant on Europe, APAC, LATAM and new business opportunities) could face higher execution risk. Competitive risk (share loss to BKNG) also continues.
Oppenheimer believes that the velocity of 2Q23 nights deceleration will heighten concerns about slowing growth:
We maintain Perform on uncertain back-half outlook and premium valuation, 21x '23E EBITDA vs. BKNG's 15x, limiting NT upside to shares.
Shares were recently off more than 7% for the week.
PayPal slides as analyst says it 'may be stuck'
PayPal (NASDAQ:PYPL) raised its full-year profit guidance, and first-quarter results topped expectations, but shares slumped on a lowered operating-margin outlook - from +125bps to +100bps - for the full year.
Q1 earnings were $1.17 per share, better than the $1.10 average expectation, driven by cost cuts and an increase in new accounts. And sales of $7.04 billion edged past the consensus.
Looking ahead, the company now expects to grow adjusted EPS by about 20% to $4.95; up from prior guidance of 18% growth to $4.87.
But Oppenheimer believes PayPal stock "may be stuck" in the near term:
We get the strategic value of Braintree, but investors will ask; how long can you cut expenses to offset profitability declines which impact valuation? Meaningful PPCP profitability help is likely quarters/years away. Thus, revenue growth likely slower than TPV. We/ investors need to see sustainable underlying margin expansion given their scale.
Deutsche Bank said the move lower in PYPL shares is a result of the investor focus on transaction margin pressures:
Transaction margins are under pressure and will only begin to improve yoy if branded volumes rebounds (as share loss worries continue). As a result, we expect higher revenues to be fully offset by lower transaction margins.
Shares were recently down some 12% for the week.
Yasin Ebrahim, Davit Kirakosyan, and Senad Karaahmetovic contributed to this report.
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