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Disney Shares Skyrocket on Strong Quarter

The news shaping the markets today

Japan’s producer prices rose 8.6% year-over-year in January, versus an 8.7% rise in December. This being the eleventh straight month of producer price inflation exerted pressure on the JPY/USD forex pair.


Australia’s building permits climbed 8.2% to 17,698 units in December, accelerating from 2.6% growth a month ago. Despite this, the AUD/USD pair declined slightly in forex trading this morning.


The Philippines reported a rise in its unemployment rate to 6.6% in December, from 6.5% in the previous month, exerting pressure on the PHP/USD forex pair.


South Korea’s current account surplus shrank to $6.06 billion in December, from $6.82 billion a month ago. The figure being almost half the year-ago surplus of $12.06 billion sent the KRW/USD pair lower in forex trading this morning.


Russia’s GDP grew 4.3% year-on-year in December, versus 5.3% growth in the prior month. However, the RUB/USD forex pair remained flat after the news.

 

What’s happening: Shares of The Walt Disney Company gained in after-hours trading on Wednesday, after the company reported upbeat earnings for the latest quarter.

What happened: The company announced higher-than-expected Disney+ subscriber additions in the quarter.

Disney’s streaming service generated substantial growth across regions but recorded a whopping 57% surge in one of the major regions.

How were the results: The Burbank, California-based company reported sharp growth in sales and earnings for the first quarter, with both figures topping market estimates.

  • Disney reported quarterly revenues of $21.8 billion, up 34% from a year ago and also ahead of market expectations of $18.6 billion.
  • Net income from continuing operations surged to $1.15 billion, or 63 cents per share, versus $29 million, or 2 cents per share, in the same quarter a year ago.
  • Adjusted earnings came in at $1.06 per share, topping the Street estimates of 61 cents per share.

Why it matters: The covid-19 pandemic disrupted several of Disney’s businesses, including theme parks, resorts, and cruise operations. However, the Disney+ streaming service kept the company’s business afloat.

The company invested billions of dollars in new programming to gain more share in the streaming market, which is dominated by Netflix.

At the end of last year, Disney+ had 129.8 million customers globally, adding 11.8 million during the latest quarter ending January 1, 2022. This was significantly higher than the consensus expectation of 7.3 million subscriber adds.

The company also released Disney+ numbers by region for the first time. It had 42.9 million subscribers in the US and Canada, up 18%. Excluding Disney Plus Hotstar, the streaming service had 41.1 million international customers. In India and some other Southeast Asian nations, Disney+ Hotstar reported 45.9 million subscribers, up sharply by 57%. The ARPU (average revenue per user) for Disney+ came in at $4.41.

The company projected its streaming service to reach between 230 million and 260 million subscribers by September 2024, with the service hitting profitability in fiscal 2024. Disney said it expects stronger subscriber growth during the second half of the current year.

Revenues from the media and entertainment segment rose 15% year-over-year to $14.6 billion, while the parks, experiences and resorts segment reported revenues of $7.2 billion, up more than 100% from a year earlier.

How shares responded: Disney’s shares climbed 6.6% to $157.00 in after-hours trading, following the release of quarterly results. The stock had added 3.3% during regular trading session on Wednesday.

What to watch: Markets will continue to monitor new releases at Disney+ and the further recovery of the parks, experiences and resorts segment with the easing of coronavirus-related restrictions.

The markets today

US stocks will be in focus today ahead of a couple of major economic reports from the country

 

Context: Wall Street recorded gains on Wednesday, with the Nasdaq 100 closing above the 15,000 mark.

Details: Tech shares rose sharply on Wednesday, looking to build on their recovery. Shares of Facebook-parent Meta Platforms spiked more than 5%, after the downturn following its earnings report last week.

The Nasdaq 100 had more into the correction zone early in the year but has climbed more than 7% from its January 27 lows.

“We continue to have a preference toward lower priced/value tech names, and note that the least expensive quintile of tech has the highest expected 5-year growth outlook in more than a decade, and valuations are attractive relative to history,” Bernstein analyst Toni Sacconaghi said in a note to clients.

Market sentiment was also boosted by strong earnings from several companies. Shares of Chipotle Mexican Grill jumped more than 10% on Wednesday, while Lyft’s stock added around 7%.

Bond yields declined on Wednesday, after climbing since the beginning of the year. The benchmark 10-year Treasury note declined to 1.945%, after hitting 1.97% in the previous session.

The Dow Jones index added around 305 points to settle at 35,768.06 on Wednesday, after gaining more than 370 points in the previous session. The S&P 500 rose 1.45% to 4,587.18, while the Nasdaq 100 surged 2.1% to close at 15,056.96.

What to watch: Traders await the release of economic data on inflation and initial jobless claims from the US today. The annual inflation rate is expected to accelerate to 7.3% in January, from 7% in the previous month. The number of people filing new claims for jobless benefits is projected to decline to 230,000 in the latest week, from the previous week’s reading of 238,000.

Other Markets: European trading indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 1.01%, 1.57%, 1.46% and 1.72%, respectively.

Support & resistances for today

Technical Levels News Sentiment

EUR/USD – 1.1420 and 1.1424



Positive


AUD/USD – 0.7162 and 0.7169


Negative


Nasdaq 100 – 15,022.10 and 15,073.31


Positive


S&P 500 – 4,574.24 and 4,586.38


Negative


Gold – 1,833.45 and 1,835.80 Positive

 

Market snapshot

What else to watch today

Saudi Arabia’s industrial production and GDP growth rate, Turkey’s unemployment rate, total motor vehicles production and foreign exchange reserves, Bank of Indonesia’s interest rate decision, South Africa’s mining production, gold production and industrial production, Brazil’s industry confidence indicator, US natural gas stocks change and government budget, China’s total vehicle sales, new yuan loans, value of loans, total social financing and money supply M2, as well as Mexico’s central bank interest rate decision.


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