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Vladimir Zernov
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Disney

Disney Video 14.05.21.

Disney Stock Falls As Disney Plus Subscriber Growth Misses Estimates

Shares of Disney found themselves under significant pressure after the company released its quarterly results.

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Disney reported revenue of $15.6 billion and GAAP earnings of $0.50 per share, beating analyst estimates on earnings and missing them on revenue.

The market decided to focus on the revenue miss which was triggered by slower-than-expected growth in Disney Plus subscribers. Disney Plus subscribers totaled 103.6 million compared to analyst consensus which was closer to the 110 million mark.

Before the report, many analysts believed that the strong growth of Disney Plus will somewhat offset problems in the theme parks and resorts segment which remains under pressure due to the pandemic.

While the situation is improving in the U.S., it remains to be seen whether Disney’s parks will be able to quickly get to their previous performance. Meanwhile, the weaker-than-expected growth of Disney Plus may continue to serve as a bearish catalyst.

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What’s Next For Disney?

Analysts expect that Disney will report earnings of $4.9 per share in 2022 so the stock is trading at 35 forward P/E. While such valuation levels are often seen in today’s market, they require strong growth to support the upside momentum.

For Disney, the key pillars of the bullish thesis were the fast return of demand for parks and resorts when the economy reopens and fast growth of Disney Plus. The growth of Disney Plus missed estimates, and it’s not surprising to see the stock fall after the report.

At the same time, it should be noted that Netflix has also missed subscriber growth estimates in the first quarter of this year, which means that streaming companies may have faced a market-wide slowdown of demand.

In this light, it looks that it’s too early to make conclusions, and investors will need to monitor the numbers for the next few quarters to see if streaming services manage to get back on the path of fast growth. Meanwhile, Disney shares may attract bargain hunters who waited for a pullback to buy the company’s shares.

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