The delta variant is hurting Southwest Airlines. Is Disney next? We’ll learn more on earnings call later, but we do know estimates have come down for this Q & even last Q, perhaps a sign analysts are just generally feeling less optimistic www.bloomberg.com/opinion/articles/2021-08-12/delta-variant-threatens-disney-world-recovery-as-travelers-cancel-flights?sref=jO7iaJLA @bopinion $DIS
Wondering when Disney will require vaccinations to enter its theme parks? #COVID19 #DeltaVariant $DIS should be an interesting question for CEO Bob Chapek next week
In response to the delta variant, two of the largest US companies, Wal-Mart and Disney, are joining a growing group of companies requiring vaccination for some of their employees. $DIS $WMT #economy #recovery pic.twitter.com/n8gWvkpOjS
I’ve already got Disney+! Delta Plus seems unnecessary!!!! 😩😩😩😩 #COVID pic.twitter.com/E9xYf5WAQ1
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Walt Disney is set to release its results for the April-to-June period on Thursday after the market closes. Investors are expecting a big improvement from the year-ago period, during the worst months of the Covid-19 pandemic in the U.S.
On average, analysts are forecasting $633 million in net income on $16.8 billion in revenue from Disney in its fiscal third quarter. That profit translates to 36 cents per share, or a forecast 55 cents after adjustments. It compares with a loss of $2.61 per share and $11.8 billion in revenue a year ago.
Back then, theme parks and movie theaters were closed, sports events were canceled, and advertisers pulled back on spending. That pushed Disney’s earnings deep into the red and forced the company to suspend its semiannual dividend payment.
But that same stay-at-home shift was a boon for Disney+, the media and entertainment giant’s upstart streaming service. Former CEO Bob Iger and his successor Bob Chapek have staked the future of Disney on its direct-to-consumer push. Soaring subscriber counts at Disney+, Hulu, and ESPN+ during last year’s lockdowns pushed Disney stock to record highs, even as its traditional business suffered.
The fiscal third quarter could be a big of a reversal of those trends. A reopening economy, savings-rich consumers, and eager advertisers will likely have Disney’s legacy divisions looking strong, just as streaming loses its biggest tailwind.
And Disney’s stock has been stuck in neutral lately: It’s up 36% over the past year—three points ahead of the S&P 500 —but flat since December and down 12% from its March record.
Disney ended its fiscal second quarter in March with 103.6 million Disney+ subscribers (which includes Disney+ Hotstar in India and Star+ in other international markets). On average, Wall Street analysts expect that total to rise to 115.2 million, according to FactSet. That’s on the way to Disney management’s guidance of 260 million Disney+ subscribers by the end of its fiscal 2024. The company’s direct-to-consumer revenue is seen rising to $4.3 billion, and the segment is expected to register an operating loss of more than $500 million.
Netflix (NFLX) cited the impact of widespread vaccinations and lifting of government restrictions during the second quarter for a decline of 430,000 subscribers in North America in the second quarter, while growth decelerated abroad. Investors appear to be worrying that Disney+ won’t be fully immune to those same pressures. But that means that expectations are low, and it might not take a big beat on the subscriber front to send shares rallying.
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As for Disney’s theme parks and consumer products business, that faces some easy comparisons. Revenues in the segment tumbled last year, as Disney’s properties across the globe were forced to close and then operate under capacity limits. Analysts expect a fourfold increase in Disney’s parks revenue from the year-ago quarter. They still predict an operating loss in the period, however—the segment used to earn as much as Disney’s broadcast and cable networks in prepandemic times. Any negative commentary from management on Thursday about the Delta variant’s impact on attendance in the current quarter could cast a cloud on otherwise strong results there.
Disney’s networks—which include ABC, ESPN, Disney Channel, FX, and National Geographic—should likewise benefit from the comparison to the year-ago period as sports leagues and advertisers returned. That segment is expected to be responsible for Disney’s entire profit in the quarter.
Disney is in the midst of a metamorphosis from a legacy media and parks company into the direct-to-consumer entertainment conglomerate of the future. The fiscal third quarter may underline the bumpy road it takes to get there.
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Walt Disney is set to release its results for the April-to-June period on Thursday after the market closes.
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Read full article at Barron's
12 August, 2021 - 01:11pm
12 August, 2021 - 01:11pm
12 August, 2021 - 07:39am
Walt Disney Co. is expected to report a sharp jump in sales for the June quarter as more visitors are going to its parks and moviegoers are flowing back into theaters.
However, the world’s largest entertainment company is likely to face questions Thursday about the potential business impact of the Delta variant of Covid-19 and how it plans to continue growing its streaming services.
The company reports fiscal third-quarter earnings Thursday afternoon, and analysts, on average, expect sales of $16.8 billion, according to FactSet. That would be an increase of 42% from a year earlier—when the pandemic locked down much of the world—but still below 2019 levels. Analysts see earnings of $709 million, FactSet said, compared with a year-earlier loss of $4.72 billion.
Analysts expect Disney+ subscriber numbers to reach 115.2 million, which suggests the service may have added close to 12 million new customers during the quarter, a period when more consumers sought entertainment away from home and possibly streamed less.
“We think that subscriber growth could slow in the near term as other leisure activities resume after the pandemic," said David Heger, an analyst at Edward Jones. In addition, analysts and executives say, some consumers may be questioning the number of streaming services they subscribe to.
But Mr. Heger notes that the company still has significant markets to bring online, including parts of Latin America this month.
Despite the surge in direct-to-consumer entertainment services in the U.S., Disney is one of only a handful of companies that competes in streaming globally. A steady expansion could boost overall subscriber numbers, analysts say, and allow it to compete with Netflix Inc. and Amazon.com Inc.’s Prime Video service.
Disney’s share price often reflects the momentum seen in the streaming service. The stock rose steadily from its early pandemic low as Disney+ added subscribers, including when the total hit 100 million after just 16 months. Then the second-quarter earnings report in May showed about six million fewer new subscribers than analysts had expected, and the stock fell. It has mostly flatlined since, closing Wednesday at $178.09.
Disney’s willingness to experiment with distributing movies on its streaming service has provided a new avenue for generating revenue. The summer release “Black Widow" collected more than $60 million in fees when it simultaneously premiered in theaters and on Disney+ for an additional $30.
But “Black Widow" star Scarlett Johansson dropped a bombshell on the entertainment industry when she sued Disney for breach of contract, saying the simultaneous release on Disney+ and in theaters deprived her of tens of millions of dollars. Disney says her suit has no merit. The dispute has highlighted debate in Hollywood about how stars should be compensated in the streaming age.
The conflict hasn’t hit Disney’s stock price, and analysts don’t seem overly concerned. But it could come up as part of the discussion of the quarter because it calls into question a key element of Disney’s streaming strategy. If talent disputes limit the number of movies that can simultaneously premiere on Disney+, that could mean fewer exclusive offerings with which to attract subscribers.
While box-office revenue in the U.S. and Canada has rebounded significantly in recent months, ticket sales are still far off pre-pandemic levels. Overseas, studios have already seen lockdowns in major markets like France and Japan eat into potential box-office grosses.
For its theme parks, which in the past coupled with consumer products has been Disney’s largest revenue generator, concern over the Delta variant of Covid-19 may become a focal point. It is forcing live-entertainment companies to abandon or readjust plans for this fall and winter. Disney’s parks in Orlando, Fla., and Anaheim, Calif., are still open, but could be subject to capacity restrictions or other measures if the spread continues.
Disney has already reintroduced a policy requiring guests to wear masks while indoors at its parks, but it has stopped short of mandating proof of vaccination. Investors are watching the infection rates wearily, considering the $1 billion-plus blow that Covid-related shutdowns brought to Disney’s parks division last year.
In Florida, Covid-19 infections have risen dramatically in recent weeks, but state lawmakers have been reluctant to reimpose restrictions. In California, Disney publicly fought with Gov. Gavin Newsom after he kept Disneyland and other theme in the state parks closed for much of 2020.
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