Walt Disney Video 12.02.21.
Disney+ Continues To Grow At A Healthy Pace
Shares of Walt Disney moved lower after hitting all-time highs after the release of the quarterly earnings report.
Walt Disney reported revenue of $16.25 billion and GAAP earnings of $0.02 per share, beating analyst estimates on both earnings and revenue. The company’s Parks, Experiences and Products segment remained under significant pressure as Disney’s parks and resorts remained closed or operated at reduced capacity while cruises were suspended.
Meanwhile, the number of Disney+ subscribers increased to 94.9 million which was above analyst forecasts. ESPN+ and Hulu also showed strong growth as consumers spent more time at home due to pandemic and remote work.
The growth of streaming services has clearly supported the stock’s growth in recent months. While many of the company’s parks are not even opened, investors want to prepare for the time when virus-related restrictions are cancelled and people flood Disney’s parks after many months of waiting. In this light, the market is ready to ignore the company’s near-term performance and stays focused on the outlook for the future.
What’s Next For Walt Disney?
At this point, it is not clear when Disney parks will be opened and cruise ships will be allowed to sail, but it is clear that customers will quickly get back to Disney once restrictions are lifted, which will immediately boost Disney’s financial performance.
At the same time, the stock has become pricey after the recent rally and trades at about 40 forward P/E. However, rich valuations are often seen in today’s markets if the company has a strong growth story. In Disney’s case, investors are betting on the potential strength of Disney+ which is already showing strong results.
The stock’s rich valuation is likely serving as the main driver for today’s sell-off. Disney’s quarterly results exceeded expectations, and some traders decided that it was the time to “sell the news” and take profits near all-time high levels. Once this move is over, the stock will have decent chances to continue its upside trend.
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This article was originally posted on FX Empire