Disney Subscriber Growth Slowed in Q4 FY2021

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The Walt Disney Company is a leading diversified international family entertainment and media enterprise, which was founded in the 1920s and bears the name of its iconic creator. It reported its financial results for the quarter ended October 2, on Wednesday after US markets closed, largely missing estimates.

DISNEY+ USERS

The biggest disappointment probably came from the addition of just 2.1 million Disney+ subscribers during the reported period, which rose to 118.1 million [1]. Disney's streaming service has seen a meteoric rise since it first launched around two years ago and has managed to provide solid content with popular original TV shows, such as the Star Wars-based The Mandalorian, which had won seven Emmy awards in September.

Yesterday's numbers marked a slowdown in subscriber growth, for which CEO Bob Chapek had warned from mid-September [2]. This seems to represent a broader trend, as the world moves away from pandemic lockdowns and as users have many streaming services to choose from. Rival Netflix (NFLX.us), managed to add a solid 4.4 million paid subscribers in Q3 [3], not having avoided recent disappointments though.

REVENUE, EPS & PARKS

Total Revenues came in at $18.534 billion in the reported quarter, marking a 26% y/y increase, while Earnings per share were reported at $0.37 against a loss of 0.20 a year ago.

The brightest spot was the "Disney Parks, Experiences and Products" business that had taken a big hit from the pandemic restrictions. The segment had managed to turn profitable in the previous quarter and yesterday's Q4 FY2021 results showed further progress, with Operating Income of 640 million [1].
All Disneyland parks are currently open and accept visitors, after Disneyland Paris – the last one to remain closed – had reopened in June.

STOCK MOVEMENT

During the July-September quarter, DIS.us lost nearly 4%, having a poor performance after the record high set in early March. The current month, has been good so far, although it failed again to move past the 180.00 area.

Having missed estimates with yesterday's report, DIS.us could open with a negative reaction. Caution is needed, since the stock tends to produce outsized moves following earnings and any technical approach would be risky ahead of the open.

A big negative open could bring a breach of its May lows (166.92) and expose DIS.us to the 2021 lows (160.44). Any positive catalyst would give DIS.us a chance to push again for the 180.00 handle and look towards the downward trend line from the all-time highs (182.00-182.50).


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

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 11 Nov 2021 https://thewaltdisneycompany.com/app/uploads/2021/11/q4-fy21-earnings.pdf

2

Retrieved 11 Nov 2021 https://thewaltdisneycompany.com/app/uploads/2021/09/bc-gs-transcript-092121.pdf

3

Retrieved 11 Nov 2021 https://s22.q4cdn.com/959853165/files/doc_financials/2021/q3/FINAL-Q3-21-Shareholder-Letter.pdf

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