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Walt Disney Co. has managed to adroitly navigate the pandemic despite being hamstrung by shuttered amusement parks and an indefinite pause in live-action productions.
Propelled by its streaming service, the Magic Kingdom DIS, +0.26% should post respectable fiscal first-quarter results on Thursday.
Still, how does Disney fend off the likes of Apple Inc.’s AAPL, -0.36% Apple TV+, Netflix Inc. NFLX, -0.26%, Comcast Corp.’s CMCSA, -0.88% Peacock, Amazon.com Inc.’s AMZN, +0.72% Prime Video, AT&T Inc.’s T, -0.03% HBO Max, and others while Disney operates at less than full strength?
It offered plenty of answers in December during a marathon investor day briefing. It unfurled a slate of big-budget movies — including “Raya and the Last Dragon” in March 5 — will open on its burgeoning streaming service and in theaters as part of a direct-to-consumer push. In coming years, Disney+ will be home to a fire hose of 10 new Marvel series, 10 new “Star Wars” series, 15 animated and live-action Pixar and Disney series, and 15 Disney-Pixar films that will be newly branded as Disney+ Original.
As of Dec. 2, Disney+ had 86.8 million paid subscribers, and Disney expects that figure to balloon to 230 million to 260 million by the end of 2024. Including Hulu and ESPN+, total world-wide direct-to-consumer subscribers should reach 300 million to 350 million by the end of 2024.
It might be a stretch for Disney+ to top 100 subscribers in Q1, but plenty of analysts are looking for sustained growth.
What to expect
Earnings: Analysts polled by FactSet on average expect a loss of 33 cents a share, which would be a decline from $1.53 a share in the first quarter of 2019. The estimate has plummeted from a penny a share on Sept. 30.
Contributors to Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, are also projecting a loss of -33 cents a share on average.
Revenue: Analysts on average expect Disney to report $15.89 billion in first-quarter revenue, according to FactSet, down from $20.86 billion the year before.
Estimize contributors are expecting revenue of $15.89 billion.
Stock movement: Through Thursday, shares are up 28% over the past 12 months, giving it a market value of $327 billion. The S&P 500 index SPX, +0.39% has increased 17% in the past year.
What analysts are saying
• “We now expect Disney+ to end FQ1 with 95m subs from 90m prior, and vs. 86.8m reported as of December 2, as we are encouraged by third-party data. According to Apptopia, Disney+ mobile MAUs have increased from 33m as of December 2 to 50m as of January 2, with substantial growth coming from Brazil and Mexico.” — JPMorgan analyst Alexia Quadrani, while maintaining an overweight rating and hiking price target to $210 from $175 on Jan. 11.
• “We were wrong… We were simply blown away [on investor day] by the depth of content being created for Disney+ (and the dollars behind it). Increasing content spend on Disney+ to over $8 billion by 2024 compared to a target of $4 billion set just a year ago is a dramatic acceleration.” — Lightshed Partners analyst Richard Greenfield, upgrading Disney’s rating to neutral from sell on Jan. 8.
• “We maintain Buy on differentiated assets, direct-to-consumer momentum (Star/Star+ launches and more Disney+ markets in 2021; content investment should also benefit consumer products/licensing and Parks), and out-years post-COVID recovery at Parks (we expect
pent-up demand on leaner cost base).” — Truist Securities analyst Matthew Thornton, maintaining a buy rating and raising price target to $195 from $175 on Jan. 5.
