Loss in Indian Business Sees Disney Stock Fall

Disney+ and Hulu, posted an operating income of $47 million, barely squeaking in their first profit compared to their loss of $587 million over the prior-year period. 

Finally, it looks as though Disney’s streaming service has turned a profit for the first time in its history. However, the company expects weaker results for this business segment for the current quarter, which has caused the stock to fall 10% in early trading.

Background

A key priority for the entertainment giant was to achieve sustained profitability in streaming. This is because cable TV has continued to decline in recent years. CEO Bob Iger has made a strong impression with his turnaround plan, leading investors to have a bullish look at the stock in recent months. The company also scored a fresh win off of their high-profile proxy fight with activist investor Nelson Peltz.

Current News

In Disney’s second quarter, their direct-to-consumer (DTC) segment of the entertainment business, which includes both Disney+ and Hulu, posted an operating income of $47 million, barely squeaking in their first profit compared to their loss of $587 million over the prior-year period. 

However, it looks like that profit will not last long as Disney expects their third quarter to be red, driven by their loss of the Indian brand Disney+ Hotstar. 

Additionally, other Disney streaming services, such as ESPN+, reported a $18 million loss versus the $659 million loss over the year-earlier period.

Not too bad. 

Even with expected losses coming in for the third quarter, Disney expects profitability across all of its streaming platforms by the fourth quarter of this year. Still, investors were unhappy with the Disney+ Hotstar news, plunging the stock down.

Other metrics 

Disney beat its Q2 adjusted earnings of $1.21 a share compared to analyst predictions of $1.10. This is much higher than the $0.93 reported by Disney during Q2 of 2023. Revenue came out to be $22.1 billion, which met expectations and is a slight increase above the $21.82 billion the company reported in the year-ago period. 

Disney also surprisingly raised its guidance for its full-year adjusted earnings growth to 25%, which is up from the prior 20%.

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