Disney’s Fiscal Q1 Earnings Beat Estimates, Announces Major Deals and Upcoming Events
Disney shares experienced a significant boost in premarket trade early Thursday, rising by 7%, following the company’s impressive fiscal first-quarter earnings that surpassed expectations. Alongside this positive news, Disney also unveiled a series of major deals and upcoming events that have captured the attention of investors and fans alike.
The most attention-grabbing announcement came from CEO Bob Iger, who revealed that Disney would be venturing into the world of gaming with a staggering $1.5 billion stake in Epic Games, the renowned creator of the popular game Fortnite. This partnership will see Disney collaborating with Epic to develop new games utilizing its vast array of intellectual property, including beloved franchises such as Disney, Pixar, Marvel, Star Wars, and Avatar.
In addition to this groundbreaking gaming venture, Disney disclosed plans to launch an ESPN streaming service in 2025. This move demonstrates the company’s commitment to expanding its streaming offerings and capitalizing on the growing demand for sports content in the digital realm. Furthermore, Disney announced that it would exclusively stream musician Taylor Swift’s Eras Tour movie on its platform, Disney+. This exclusive content deal is expected to attract a significant number of subscribers and further solidify Disney’s position in the streaming market.
Fans of the hit animated film “Moana” will also be delighted to hear that Disney has confirmed a sequel is in the works and set to be released later this year. The news of a follow-up to this beloved movie has generated immense excitement among fans worldwide, who eagerly await another adventure with their favorite characters.
Despite missing revenue estimates and experiencing relatively flat year-on-year growth, Disney’s earnings per share for the first quarter exceeded expectations at $1.22 adjusted, compared to the forecasted 99 cents. Additionally, the company declared a dividend of 45 cents per share, payable in July, which represents a 50% increase from its previous payout in January.
While Disney faced challenges on its streaming platform, Disney+, with a loss of customers, the company managed to offset this setback with increased revenue resulting from a rise in subscription costs. Furthermore, Disney provided investors with an update on its cost-cutting strategy, aiming to reduce expenses by at least $7.5 billion by the end of fiscal 2024. The company also projected earnings per share for the year to be around $4.60.
According to Ben Barringer, a technology analyst at investment manager Quilter Cheviot, Disney’s results demonstrate stable revenue and effective cost management. Barringer believes that the partnership with Epic Games has the potential to yield fruitful results, although he anticipates it will be a gradual process. He stated in a note, “Disney anticipates modest revenue growth while maintaining a focus on cost discipline to ensure returns for shareholders. This strategy will garner support from its activist shareholders, despite ongoing challenges in the Parks business and a continued decline in linear television.”
It is worth noting that Disney and CEO Bob Iger have faced pressure from activist investor Nelson Peltz to improve the company’s performance. Peltz’s investment firm expressed their dissatisfaction with the previous year’s results, stating, “We saw this movie last year, and we didn’t like the ending.” However, with the recent positive earnings and the promising developments on the horizon, Disney appears to be taking significant steps towards addressing these concerns.
In conclusion, Disney’s fiscal first-quarter earnings have exceeded expectations, bolstered by impressive announcements of major deals and upcoming events. The company’s foray into gaming with its partnership with Epic Games, the launch of an ESPN streaming service, exclusive content deals, and the promise of a highly anticipated sequel have generated excitement among investors and fans alike. Despite challenges in the streaming and linear television sectors, Disney remains focused on cost discipline and delivering returns for shareholders. With these recent developments, Disney is poised to continue its legacy as a powerhouse in the entertainment industry.
