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Disney’s sub growth warning, Dave & Buster’s CEO retires, General Mills posts higher sales

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Yahoo Finance’s Brian Sozzi and Emily McCormick discuss which stocks are making big moves in the market today.

Video Transcript

EMILY MCCORMICK: Well, another company that we're watching trying to shake off losses this morning is Disney. Now we're seeing those shares moving up about 1% in the pre-market session after a more than 4% drop yesterday. Now a couple of negative headlines coming out from the entertainment giant yesterday, Brian. We had CEO Bob Chapek speaking at a Goldman Sachs conference.

And during that, he said that he expects production delays for new content will impact fourth quarter results, and that Wall Street should expect a low single digit millions increase in streaming subscribers for the period, which was also below estimates. Now, of course, Brian, we know that Disney tends to be trading on its Disney Plus subscriber numbers on those net subscriber additions, especially as we still have those parks and resorts businesses impacted by the COVID-19 pandemic.

But, definitely not a lot of good news here coming out from the company on the streaming front.

BRIAN SOZZI: Now, you're right on the mark, Emily. This stock, Disney shares, have traded on Disney Plus subscribers really for going on two years, and the company has its own self to blame for that. They have hyped Disney Plus for over a year, it's amazingness, all the content on it, the low price, the subscribers. It's really one of the only things they talk about on their earnings call now, and the parks are secondary.

So, if that is in fact slowing down, and it has, according to Chapek, which ultimately brings the question, where else is the business slowing down and what else is happening inside of Disney right now because of the ongoing pandemic? Are you worried about what the company reports when it reports earnings in a couple of weeks? But if you're a believer in the market knows everything, price is truth in the stock market, I can't say that you would be surprised by what Bob Chapek had to say here.

Disney shares is down about 11% over the past six months, according to our five friends at Yahoo Finance. Plus, I mean, you have the broader market up double digits over that same time span, so the market, at least, is saying it is concerned about a slowdown in subscribers on Disney Plus, concern that the Park recovery that was also hyped when Disney reported a couple of months ago, that may not be recovering to the extent it should be because of the ongoing pandemic, of course, current concerns about the Delta variant.

And then secondarily, Emily, off this commentary from Disney, I will be concerned if you own some shares of Netflix here. You've written that stock price up a month and a half year. And if Disney is worrying about content production delays because of COVID, why shouldn't or wouldn't that be the case over at Netflix?

EMILY MCCORMICK: I think you're absolutely right, Brian. And you know, we should point out that we did see Netflix's stock come down just about 0.4% yesterday, so not even near the magnitude that we saw with that more than 4% incline in Disney. But it's clear here that Wall Street is now even more heavily focused on, what are the subscriber numbers going to look like for Netflix? We've seen those really disappoint so far in 2021, and Netflix really has boxed itself into this sort of metric dilemma where the thing that Wall Street is focusing on is those net subscriber additions.

And of course, the fact that Netflix has been around for quite some time now, it is really that legacy streamer when we think about some of these other newer competition that came in from Disney Plus to the Peacock with NBC Universal. It really goes to show here that when you hit a certain point of saturation, it does, of course, become more difficult to actually bring on additional subscribers, whereas Disney Plus perhaps has a little bit more run room on those subscriber gains.

BRIAN SOZZI: Emily, I'm getting a little push back from our producer Val on my thesis there in Disney. Correctly, she is putting that at Netflix has more new content, and that will be ultimately showed off in about two days at Netflix's first ever fan event. Point well taken, you know. I don't know everything.

EMILY MCCORMICK: Definitely fair. And of course, as we've been talking about for the streaming wars, it really does come down to content. Who has the best content, who has the best talent, and who is ultimately able to bring on and retain those users. But real quick, Brian, I want to highlight one other stock we're watching, Dave and Busters. We did just get news of an executive shakeup. It looks like CEO Brian Jenkins is retiring.

BRIAN SOZZI: Yeah. This one coming out of the blue, I would argue, Emily. David and Busters, we just talked about it a couple of weeks ago, much better than expected comeback quarter as people got back out there and went and play video games, skee ball, and got drunk at the Dave and Buster's bar and enjoyed the new menu. But overall, you're seeing a stock that under the leadership of the now outgoing CEO has under performed the broader market, so it could be time for change. It's interesting to see Kevin Sheehan appointed the interim CEO.

He was the chairman of the company. I remember talking to him when he was the CEO of Norwegian Cruise Line several years ago. He's also a board member over a Gannett. Clearly, a very experienced executive to drive this company through this transition period.

[APPLAUSE]

EMILY MCCORMICK: Absolutely, Brian. And we do have the opening bell now, this morning, this Wednesday morning, September 22. It's looking like we are going to be getting a higher open today on Wall Street. And this morning, we can see here, we have the restaurant tech company Toast ringing the opening bell. The company makes a point of sale systems for restaurants. It also just priced this initial public offering yesterday at $40 a share to raise about $870 million, and those shares are going to start trading today.

We should also note that we have Toast Chief Financial Officer Elena Gomez on with us in the next hour of our program here on Yahoo Finance Live. Now, Brian, one other stock that I do want to highlight this morning as we have the dust settling around these opening trades for the major stock indexes is General Mills. And earlier on the show, we were talking about companies reporting earnings results. General Mills is in that bucket of stocks that did top expectations here.

And one point that I really want to highlight is in General Mills convenience stores and food service net sales. And of course, that is a little bit of a smaller part of the business right now, bringing in $482.4 million, that was above expectations. And of course, again, small drop in the bucket here compared to overall net sales of $4.5 billion. But the really interesting thing about this metric, Brian, is that we actually style this top levels from the same quarter in 2019.

And with a lot of these food companies, we have been seeing them under pressure in these food service, in these restaurant, and convenience store sides of their business because of a lack of consumer mobility during the pandemic. But at least for General Mills, it looks like they're trending in the right direction here and getting back above those pre-pandemic levels.

BRIAN SOZZI: Such an important point there, Emily, and you're right. And because of that comeback in the convenience store, their snacks business, those portable treats that they sell, snack bars, et cetera, that turned around a little bit has me would have me keen on kicking the powers on Hostess Brands, you know. Realistically, if that convenience store channel is working for General Mills, it is likely working for many other companies.

And also, a company like a Hostess Brands that thrives on that convenience store shopper, other a couple of other things to point out to from this General Mills report. I always enjoy reading this company's earnings profit margins. Gross profit margin is down 120 basis points in large part, because of inflation. So, another company warning today that they are continuing to see high levels inflation, whether it's in food, workers, you name it. And of course, the other one would be FedEx this morning warning about inflation.

Also, this one for our producer Pam Grande, the pet business, very strong for General Mills in the most recent quarter. They operate through their Blue Buffalo line of pet food primarily. Volume in the pet food business for General Mills, up 13 percentage points in the most recent quarter, very good. Again, immediately, if you're trying to link some trades together and think about other companies who could be seeing continued strong pet demand because of strong pet adoption during the pandemic, obviously, you're looking for our Chewy.

EMILY MCCORMICK: Absolutely, Brian. And again, we are seeing General Mills shares now extending those overnight declines up nearly 2% as we speak. But again, a lot coming out here from the earnings front for a lot of these major companies.