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Disney’s Share Price Drops As 4Q21 Results Miss Expectations

Disney’s Share Price Drops As 4Q21 Results Miss Expectations

Marcos de Mathos

Disney’s 4Q21 results (for the quarter ended 2 October 2021) missed Wall Street estimates across the board. Adjusted earnings per share (EPS) came in at USc37 vs. USc51 expected by Refinitiv consensus analyst forecasts, while revenue rose 26% YoY to US$18.53bn vs. Refinitiv consensus analyst expectations of US$18.79bn. Disney added 2.1mn Disney+ subscribers during the quarter under review, reaching a total of 118.1mn subscribers. This was in line with Disney’s own estimates, but consensus analyst forecasts were more optimistic, forecasting 125.4mn total Disney+ subscribers and thus suggesting 9.4mn additional subscribers since 3Q21.

The company also said that it made less from each paying Disney+ subscriber in the quarter under review vs. the same quarter last year (4Q20) – US$4.52 vs. US$4.12 per user or down c.9% YoY. Disney attributed this to a "higher mix of Disney Plus Hotstar subscribers in the current quarter compared to the prior-year quarter." CFO Christine McCarthy said that she expects Disney+ to be profitable within 3 years, noting that the company still believes that it is on target to reach between 230mn and 260mn paid subscribers by September 2024.

Revenue from Disney’s Parks, Experiences and Products segments increased due to the parks reopening (all its theme parks and resorts were open during 4Q21), but here as well, the market expected stronger growth, despite revenue jumping by 99.4% YoY and beating analysts’ estimates. This segment was the most impacted by the Covid-19 pandemic . 

The company’s share price was down over 4% in after-hours trading on the day of the results release and fell by 7% on 11 November. The stock has declined from theUS$200/share level in March 2021, to around US$162/share following these results.

Written exclusively for Moore South Africa by Marco de Matos from Anchor Research