Disney Tumbles 5% as Q4 Streaming User Growth Falls Short
By Dhirendra Tripathi
Investing.com – Disney stock (NYSE:DIS) traded 5% lower in Thursday’s premarket as user growth at its streaming service Disney+ cooled off more than anticipated, causing the company to miss both sales and earnings estimates in its fiscal fourth quarter.
Last year was a record for streaming services as people stayed home and binge watched in the pandemic. A bit of cooling was expected as economies reopened but the slowdown in streaming growth still came as an unpleasant surprise.
Disney+ gained 2.1 million customers during the quarter ended October 2 to close at around 118 million globally, missing expectations of over 124 million. Average monthly revenue per subscriber fell 9% to $4.12. Net subscriber additions at its other streaming services, ESPN+ and Hulu, also fell short of expectations.
Walt Disney management indicated it expects the slowdown to be temporary and reiterated its goal of 260 million customers by 2024.
Losses in the direct-to-consumer business, which also includes ESPN+ and Hulu, widened to $630 million as the world’s largest entertainment company spent heavily on content and promotions. Higher costs of sports programming and marketing at ESPN+ also contributed to the losses, as did the delayed restart of the Indian Premier League cricket tournament, although the service managed to grow its average revenue per user. Hulu also grew its ARPUs.
Disney reported fourth-quarter earnings of 37 cents a share on revenue of around $19 billion.
Theme parks, which were especially hard hit by the pandemic last year, swung sharply back to a profit of $640 million.
The movie studio business posted a loss of $65 million in the period, however, as higher marketing costs and other expenses for major releases like Scarlett Johansson-starrer ‘Black Widow’ and ‘Shang Chi’ took a toll.
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