Why Disney Stock Is Down By 8% Today
Disney Stock Falls After Quarterly Report Misses Analyst Estimates
Shares of Disney found themselves under strong pressure after the company released its quarterly results. Disney reported revenue of $18.53 billion and adjusted earnings of $0.37 per share, missing analyst estimates on both earnings and revenue.
Disney+ subscribers grew by 2.1 milion to 118.1 million, but analysts expected stronger performance. Revenue from Disney parks increased due to reopening, but it looks that the market expected more aggressive growth.
The slow growth of Disney+ pushed some analysts to talk about saturation, suggesting that Disney+ may have trouble growing outside of the core fanbase. It should be noted that analysts rushed to cut their price targets for Disney stock, which has put additional pressure on the company’s shares.
What’s Next For Disney Stock?
Currently, analysts expect that the company will report earnings of $4.25 per share in the current fiscal year and earnings of $5.41 per share in the next fiscal year, so the stock is trading at roughly 30 forward P/E. This is not cheap, so Disney must show that it is able to grow at a robust pace to justify this valuation level.
The company stock has declined from the $200 level in March to the $160 level, but it remains to be seen whether traders will rush to buy the stock due to problems with Disney+ growth. The company noted that it was focused on content and that it should bring additional viewers to the platform, but the market is not buying into this narrative as it expected faster growth in 2021.
The stock may remain under pressure in the upcoming weeks as the company’s valuation remains rich while consensus estimates for the next years will likely move lower. There is some potential for multiple compression due to disappointing growth of Disney+. However, it should be noted that the stock may get some support from the “buy the dip” mentality which remains strong in today’s market.
For a look at all of today’s economic events, check out our economic calendar.