Disney Shares Drop 4% As Report Disappoints With Subscriber Slowdown

Disney reported quarterly earnings above market analysts’ expectations, but earnings were below estimates. Disney’s streaming business added fewer new users than Wall Street predicted, which is similar to Netflix’s last quarter.

Disney (DIS) shares, down 1.6% this year after strong gains in 2020, fell 3.9% in non-trading time after the company released its fiscal second quarter ending in March.

The company’s results were influenced in different ways by the large-scale vaccination of the population in the United States and the abolition of quarantine restrictions. On the one hand, its Disneylands division is recovering as tourists become more active, on the other hand, its streaming video services division, which includes Disney +, has slowed revenue growth.

Market experts predicted this, pointing out that after long quarantine restrictions, consumers will prefer offline entertainment, while online activity will decline.

These shifts in consumer behavior were already reflected in a quarterly report by Disney + rival Netflix (NFLX) last month.

Key figures for Disney’s second Fin. quarter of 2021

Disney posted earnings growth of 32% year-over-year to $ 0.79 per share, $ 0.52 better than the analyst average of $ 0.27.

Revenue was $ 15.61 billion, up from Wall Street’s estimate of $ 15.87 billion. That’s 13% less than Disney earned in the same quarter of 2020, but the rate of revenue decline has slowed for the past three consecutive quarters, suggesting that the company is gradually returning to its previous growth rates. Disney’s quarterly earnings and earnings statistics for the last 2 years are available here.

“We are pleased to see more encouraging signs of a rebound in our divisions, and we remain focused on building our operations as well as ensuring long-term growth for the company,” said Disney CEO Bob Chapek.

Disney revenue

Disney’s two main divisions performed differently.

The Media and Streaming Division generated 1% more than a year ago: $ 12.44 billion.

At the same time, the division of parks, entertainment and sales of toys (Disney Parks, Experiences and Products) showed a 44% drop in sales compared to the same quarter last year: $ 3.17 billion.

In the second quarter, the streaming service Disney + added 8.7 million subscribers, bringing the total number of subscribers at the end of the quarter to 103.6 million, up from 94.9 million on January 2. This is lower than analysts’ forecasts of 110.3 million.

Disney Hulu had a total of 41.6 million paying subscribers, including 3.8 million live streaming subscribers. And the number of paid subscriptions to ESPN + rose 75% year-over-year to 13.8 million.

The addition of 8.7 million subscribers to Disney + is more than Netflix’s 3.98 million new global subscribers in its first quarter of 2021, which also fell below analysts’ expectations of 6.2 million.

However, Netflix outperforms Disney + in another very important metric – Average Revenue Per User ARPU.

ARPU Disney excluding Indian Hotstar was $ 5.61 per month. Netflix ARPU last quarter in the US and Canada was $ 14.25 per month, up 9% from a year ago.

Disney + had an average revenue per user of $ 3.99, for ESPN + it was $ 4.55, while Hulu’s live streaming and video-on-demand package showed an average revenue per user of $ 81.83.

However, the current results are satisfactory to Disney executives, gen. Director Bob Chapek noted that “every market has exceeded expectations” in terms of growing subscribers worldwide. He also noted that Disney is still expanding into new countries, with Malaysia and Thailand in June.

Disney predicts 230 to 260 million global subscribers by 2024 – bringing the company closer to Netflix’s size in early 2021 with about 208 million customers worldwide.

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