Disney Widened its Lead Over Netflix, but its Financials Leave Much to be Desired

  • DIS.us
    (${instrument.percentChange}%)
  • NFLX.us
    (${instrument.percentChange}%)

Disney Q4 FY2022 Results

In the previous quarterly results, Disney had knocked rival Netflix off the top spot in number of streaming subscribers, taking advantage of the latter's shocking loss of more than one million users during the first half of the year. However, Netflix returned to growth in the third quarter, reporting 223.09 million paid subscribers. [1]

On Tuesday it was Disney's turn to provide its latest update, which showed that it not only stayed ahead of its competitor, but actually widened the lead. It reported a total of 235.7 million users as of October 1, for it ESPN+, Hulu and Disney+ streaming services, with the last one alone adding around 12 million users in the reported quarter, in a 39% year-over-year surge. [2]

CEO Bob Chapeck talked of "rapid growth" in regards to Disney+ -which launched just three years ago- as direct result of the "strategic decision to invest heavily in creating incredible content and rolling out the service internationally" and stills expects profitability in fiscal 2024.

Despite the subscriber surge, Revenues of the Direct-to-Consumer (DTC) sector declined on a quarterly basis, while the Operating Loss widened to approximately $1.5 billion. However, during the earnings call, CFO Christine McCarthy said that losses peaked in the reported Q4 FY2022, expecting an improvement of "at least $200 million" in the next quarter. [3]

Disney's overall top and bottom line were worse compared to the previous quarter, leaving much to be desired. In the reported Q4 FY2022 (period ended October 1), the entertainment giant generated Revenue in excess of $20 billion and Net Income of just 162 million, a big miss from the $1.4 billion of Q3.

Why Trade Shares with FXCM?

  • $0.00 Commission*
  • Mini Shares - Fractional Share Trading with minimum trade sizes of 1/10 of a share.
  • Low Margin Requirements

The Parks, Experiences and Products (DPEP) business remained on its post-pandemic recovery path, with the seventh straight profitable quarter, helped by higher volumes and increased guest spending which was partially offset by cost inflation. Operating Income more than doubled from a year ago to $1.514 billion, but the figure marked a significant decline on a quarterly basis.

Disney has now become the leader of the streaming business, but the market may be getting saturated, while surging inflation is not helpful. Its tradition DPEP sector is performing well, but the current adverse economic environment creates some skepticism, whereas Covid-19 challenges have not eclipsed, with Disneyland Shanghai closed since last week. We will now be looking forward for the next quarterly results, which will reflect the company's performance during the important holiday season.

The company's stock dropped in Tuesday's extended trading after the results, as markets appeared disappointed by the top and bottom line miss. DIS.us had a bad first-half in the year, which culminated July's 2+ year lows. It bounced back however and managed to avoid losses in the third quarter.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 09 Nov 2022 https://s22.q4cdn.com/959853165/files/doc_financials/2022/q3/FINAL-Q3-22-Shareholder-Letter.pdf

2

Retrieved 09 Nov 2022 https://thewaltdisneycompany.com/app/uploads/2022/11/q4-fy22-earnings.pdf

3

Retrieved 30 Nov 2022 https://thewaltdisneycompany.com/disneys-fiscal-full-year-and-q4-2022-earnings-results-webcast/

Disclosure
*

When executing customers' trades, FXCM can be compensated in several ways, which include, but are not limited to: spreads, charging commissions at the open and close of a trade, and adding a mark-up to rollover, etc. Commission-based pricing is applicable to Active Trader account types.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}