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Feb. 11, 2021, 8:10 a.m. EST

Disney earnings preview: Can Disney+ maintain its torrid pace to sustain the Magic Kingdom?

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By Jon Swartz

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 /zigman2/quotes/203410047/composite DIS +0.72% should post respectable fiscal first-quarter results on Thursday.

Still, how does Disney fend off the likes of Apple Inc.’s /zigman2/quotes/202934861/composite AAPL -0.25% Apple TV+, Netflix Inc. /zigman2/quotes/202353025/composite NFLX -0.49% , Comcast Corp.’s /zigman2/quotes/209472081/composite CMCSA +1.79% Peacock, Amazon.com Inc.’s /zigman2/quotes/210331248/composite AMZN +0.60% Prime Video, AT&T Inc.’s /zigman2/quotes/203165245/composite T +0.67% 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 34 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 projecting a loss of 23 cents a share on average.

Revenue: Analysts on average expect Disney to report $15.91 billion in first-quarter revenue, according to FactSet, down from $20.86 billion the year before.

Estimize contributors are expecting revenue of $15.98 billion.

Stock movement: Through Friday, shares are up 28.5% over the past 12 months, giving it a market value of $327 billion. The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.36% 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.

/zigman2/quotes/203410047/composite
US : U.S.: NYSE
$ 187.26
+1.33 +0.72%
Volume: 9.45M
April 16, 2021 4:04p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$337.51 billion
Rev. per Employee
$320,813
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/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 134.16
-0.34 -0.25%
Volume: 84.92M
April 16, 2021 4:00p
P/E Ratio
36.27
Dividend Yield
0.61%
Market Cap
$2258.00 billion
Rev. per Employee
$1.86M
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/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 546.54
-2.68 -0.49%
Volume: 3.21M
April 16, 2021 4:00p
P/E Ratio
89.89
Dividend Yield
N/A
Market Cap
$243.25 billion
Rev. per Employee
$2.66M
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/zigman2/quotes/209472081/composite
US : U.S.: Nasdaq
$ 55.11
+0.97 +1.79%
Volume: 19.24M
April 16, 2021 4:00p
P/E Ratio
24.20
Dividend Yield
1.81%
Market Cap
$248.00 billion
Rev. per Employee
$616,452
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,399.44
+20.35 +0.60%
Volume: 3.19M
April 16, 2021 4:00p
P/E Ratio
81.42
Dividend Yield
N/A
Market Cap
$1701.59 billion
Rev. per Employee
$297,430
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/zigman2/quotes/203165245/composite
US : U.S.: NYSE
$ 29.95
+0.20 +0.67%
Volume: 30.16M
April 16, 2021 4:03p
P/E Ratio
N/A
Dividend Yield
6.94%
Market Cap
$212.37 billion
Rev. per Employee
$746,783
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/zigman2/quotes/210599714/realtime
US : S&P US
4,185.47
+15.05 +0.36%
Volume: 2.21B
April 16, 2021 5:15p
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