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Former Disney Senior Analyst and dot.LA Chief Correspondent Kelly O'Grady joins Yahoo Finance’s Zack Guzman to discuss what to expect from Disney’s upcoming earnings report this week.
ZACK GUZMAN: But when we talk about the other big-- I guess we'll call Disney a tech company now, with their Disney Plus service. But on that front, reporting earnings after the bell tomorrow. And of course, they're going to be delivering updates not just on the Disney side of the business, but also on the park side of the business.
And coming off a miss last quarter, I think there are a lot of questions about what's going on with those re-openings. In Hong Kong, we saw a little bit of a start-stop reopening there. Disney World is back in Florida, the bubble going on. A lot to talk about here. But what's your take on what investors should be looking for the most?
KELLY O'GRADY: Yeah, so I think there's good and bad things. They've reopened some of their parks. Disney Plus is thriving. Hamilton was that was on there in July, which added a lot of subscribers.
But film delays are happening. And also, I think you're going to see EPS and EBITDA definitely adjusted downward, as we saw that last quarter.
The key things I'm looking for are stats around Disney Plus. There's a lot of buzz that this is doing well, but let's see some hard numbers in terms of usage, in terms of subscribers.
Second thing is what is management's outlook on economic recovery now that the parks are reopening, now that sports is beginning to happen, and the NBA bubble? You're starting to see people watch ESPN a little bit more.
The other thing I'm looking for is non-cash expenses. Has Disney been able to slow their cash outflow, which will help their operations? Overall, you haven't seen their stock price rebound as much as the general market. So there's definitely some upside for investors, depending on what they say this week with their earnings report.
ZACK GUZMAN: Yeah, that upside does seem-- it is something that I noticed, too. When we think about all the talk around Disney Plus that was clearly-- when they had been rallying before, that was a lot of the focus on there. But now the parks business, again, a lot of questions around what that might look like. And I'm not even sure Disney can give that guidance on the earnings call since so much this is tied to the unknowns around the pandemic currently going on.
But when we think about weathering the storm, I guess you're raising that point here, in terms of cash burn. I mean, if this were to go on for more and more time, more and more pain being felt here by Disney, what would be your take on whether or not this spills over into 2021, deep into 2021? What that might look like for Disney, as Disney Plus, as we know, still not necessarily a money-making side of the business right now.
KELLY O'GRADY: Yeah, it's a good point you make. The parks is the cash cow. It's supposed to be funding the Disney Plus losses. It might be doing well in terms of what we're seeing, but at the end of the day, it's not profitable.
I think that if you look at the attendance at Disney Parks, the tickets are sold out. People are hungry to go back. Now, they're not at full attendance right now, but I think you're definitely going to see a swing back. They are finding ways to make this viable for consumers to feel safe, to go live out their dreams at the happiest place on earth, whether it's at the hotels, whether it's at Disney Springs.
So I personally don't think that you're going to see this too, too far into the depths of the back half of 2021. But it could certainly impact the beginning, based on what happens as we go into the fall and winter, and what that does with the coronavirus in terms of the case numbers that we see in Florida, truly. It's spiraling a little bit out of control.