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Disney posts upbeat profit, tops 150mn subscribers

 

Thursday, November 09, 2023

Today’s headlines

What’s happening: Shares of Walt Disney Company rose in the extended trading session on Wednesday, after the company released results for its fiscal fourth quarter.

What happened: The media giant reported better-than-expected earnings for its fourth quarter and record subscribers for its Disney+ streaming service.

Management also raised their cost-cutting targets in a bid to rebuild the business.

How were the results: The Burbank, California-based company reported single-digit growth in sales for the fiscal fourth quarter ended September 30.

  • Revenues grew 5% year-over-year to $21.24 billion but missed the consensus estimates of $21.33 billion.
  • Earnings came in at 82 cents per share, topping Wall Street expectations of 70 cents per share.

Why it matters: Disney managed to top earnings expectations amid higher attendance at its Shanghai and Hong Kong theme parks, which offset lower ad revenues at television network ABC.

Its entertainment revenues rose 2% year-over-year to $9.52 billion, while Experiences revenues climbed 13% to $8.16 billion last quarter. Sports revenues came in flat at $3.91 billion. Each of the three reporting units recorded a gain in operating income in the quarter, with the total surging 86% year-over-year to $2.98 billion.

The company added approximately 7 million core subscribers for Disney+ during the latest quarter, crossing the 150 million subscriptions mark. Core Disney+ subscriptions rose to 112.6 million, while India-based Disney+ Hotstar had 37.6 million subscribers by the end of the quarter.

Although Disney continues losing money at its streaming business, the company was able to significantly reduce its losses in that unit. Quarterly losses across the company’s streaming services, including Hulu and ESPN+, shrank to $387 million, from $1.47 billion in the year-ago quarter, with higher prices and ad revenues. The company also said its streaming unit remains on course to achieving profitability by September 2024.

Disney said it plans to cut expenses by another $2 billion, in addition to the $5.5 billion cut the company had announced earlier.

How shares responded: Disney’s shares rose 3.3% to $87.30 in after-hours trading on Wednesday, following the release of quarterly results. The stock has lost around 17% over the past six months.

What to watch: Investors will watch the company’s streaming business and the profitability in the unit. Markets will also monitor global economic growth, which could boost attendance at Disney’s theme parks.

The markets today

The US dollar will be in focus today ahead of a couple of economic reports

Context: The US dollar traded slightly higher on Wednesday, after recording gains for two straight days.

Details: The greenback continued to rebound after last week’s sharp downturn on growing speculations of the US Federal Reserve’s monetary tightening campaign having reached an end.

The US dollar fell sharply last week after the Fed left interest rates unchanged at its latest meeting. A downbeat jobs report for October released on Friday and several economists projecting a slowdown in the US economy in the fourth quarter also exerted pressure on the country’s currency.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.1% to 105.59 on Wednesday, after losing 1.4% last week to record its steepest decline since mid-July.

The EUR/USD forex pair gained around 0.1% to 1.0712 on Wednesday. The GBP/USD forex pair, which had surged to a seven-week high earlier in the week, eased around 0.1% to 1.2286.

What to watch: Investors await the release of economic data on initial jobless claims and IBD/TIPP economic optimism index from the US today. The number of persons filing for jobless benefits, which increased by 5,000 to 217,000 in the week ending October 28, is projected rise to 220,000 in the latest week. Analysts expect the IBD/TIPP Economic Optimism Index to improve to 36.5 in November, from 36.3 in October.

Markets will also monitor comments from Fed chief Jerome Powell on Thursday.

Other Markets: European indices closed mostly higher on Wednesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.51%, 0.69% and 0.28%, respectively, and the FTSE 100 down by 0.11%.

The news shaping the markets

US transport secretary Pete Buttigieg named Robert Mariner as the new American transport adviser for Ukraine during his trip to Kyiv. The news sent the safe-haven US dollar index slightly lower this morning.


China’s consumer prices fell by 0.2% year-over-year in October, versus a flat reading in the previous month, exerting pressure on the CNY/USD forex pair.


Japan’s value of loans rose 2.8% year-over-year in October, versus a 2.9% increase a month ago, sending the JPY/USD pair higher in forex trading this morning.


Brazil’s car production contracted by 4.4% to 200,000 units in October. This being the second straight month of decline exerted pressure on the BRL/USD forex pair.


Colombia’s annual inflation rate eased to 10.48% in October, from 10.99% in the prior month. However, inflation remaining in double digits sent the COP/USD pair lower in forex trading this morning.

What else to watch today

Saudi Arabia’s industrial production, South Africa’s gold production, mining production and manufacturing production, Turkey’s gross foreign exchange reserves, Mexico’s inflation rate and Bank of Mexico interest rate decision, Russia’s foreign exchange reserves, US continuing jobless claims, as well as Spain’s consumer confidence.


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