Disney is set to release its financial statements for the last quarter of 2020 tonight, and at a time when the company’s theme parks are still closed, analysts ‘and investors’ attention is focused on the company’s streaming activity. The corona that many left in their homes.
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In fact, some investors estimate that the bias in favor of streaming services is what will characterize Disney’s operations even after the corona has passed, and at the expense of other segments in the company. Therefore the annual report for these will only mark the buds of change so that they have patience and will not be in a hurry to judge Disney by the top line you will present or the bottom line. The streaming segment is expected to yield losses a few more years ahead, and investors for their part will want to look at the growth in the number of subscribers in it. The company’s management incidentally expects the streaming segment to become profitable in 2023 or 2024.
Because Disney is new to the market at this point it is still enjoying a higher recruitment rate than its prominent competitor Netflix. Although the latter surpassed forecasts and added 8.5 million new subscribers in the last quarter, Disney had 73.7 million people at the beginning of October, and about 86.8 million in mid-December – an increase of 23 million before the end of the quarter (Disney + platform subscribers only , With the company also owning Hollow and ESPN + services.
The expectation is that Disney will cross the 90 million subscriber threshold in the upcoming report, a target it originally set for itself only for 2024. Meanwhile, it has raised the target to 230 million subscribers by then. Analyst Laura Martin Manidham believes that within two years Disney will overtake Netflix in the number of subscribers.
Compared to the power ratios at the rate of subscriptions, in terms of the rise in the stock, Netflix has overtaken Disney: the former has risen 49% in the past year compared to a 35% rise in Disney shares. At that time, the Dow was up 9% and the S&P 500 was up 19%.
So this is the sentiment in the market for the results that Disney has shown so far, and now for the numbers that the analysts are talking about. It should be noted that Disney classifies the reporting period as the first quarter of 2021, although in terms of times it is the last quarter of 2020. Therefore, it does not provide a report for the entire year – which it provided in its previous report.
Anyway, the average outlook is for a loss of $ 0.71 for the quarter, or a adjusted loss of $ 0.34, but if we put the average aside, the forecast range seems to be quite wide, ranging from a loss of $ 1.58 per share to adjusted earnings of $ 1.39. In the previous quarter for the reporting period, Disney topped analysts’ forecasts and posted a loss of $ 0.39 per share compared to earnings of $ 1.53 per share in the same period last year.
As for revenue for the quarter, analysts’ consensus is at $ 15.9 billion, down 24% from a year earlier. Operating profit on average is $ 53 million, 98% lower than $ 4 billion in the same period last year. In the previous quarter, revenues accumulated to $ 14.7 billion, a decrease of 23% compared to the corresponding quarter in 2019, and operating profit fell by 82% to $ 606 million.
Analysts are expecting gains in Disney stock, with 75% giving it a buy recommendation. At the same time, investors seem to value the stock more than analysts – these brought it to levels of $ 190 per share, while the average target price given to it by analysts was $ 189.
And what next? This month, Disney launches the Star service for Disney + subscribers in Canada, Europe and New Zealand. Star will be a non-US equivalent of hollow content for older audiences. A similar version in Latin America, under the name “Star Plus” will be launched in June 2021. Next month will see the entry into force of the new Disney + pricing: the price per month subscription in the United States will rise to $ 7.99 while the package for the year will cost $ 79.9 ($ 69.9 previously), and in Europe a larger increase of two euros to 8.99 euros.
Disney will continue with the fresh model tried with the live-action adaptation of “Mulan”, according to which some of the titles will be released in parallel with the streaming service, a model that was also adopted on HBO Max. Thus, the Disney movie “Evidence and the Last Dragon” will go up at the end of March for streaming in exchange for $ 29.99.
To continue to expand its subscriber base, Disney will of course continue to invest in new content. The company announced that 10 more titles from the “Star Wars” series, 10 from the Marvel series and 15 live action movies will be added to the repertoire in the coming years. By 2024, the intention is to allocate $ 14-16 billion for that – half the amount for productions designed for Disney +.
In 2020, the company put on about 60 original productions, including “The Muppets Now,” “Marvel 616” and “The Mandalorian,” which has more or less become a symbol of the streaming service. This is still a figure that stands far behind the oiled Netflix machine, which in the past year has raised about 40-50 productions per month, according to Variety.