Disney shares rise as streaming soars, but can it topple Netflix?

Posted: 9 February 2022 10:57 pm
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The number of Disney Plus subscribers is surging, but can the content creators at the House of Mouse chase down the streaming service giant?

Netflix is currently the undisputed king of streaming services, but for the first time, it is struggling to grow. At the same time, its competition is getting stronger.
Case in point: Disney, which is taking advantage while Netflix struggles.
For the first time, growth in new customers for its Disney Plus service has surpassed its rival.
Disney reported last night that the company added 11.8 million Disney Plus subscribers globally in the last quarter. As it stands, Disney has 129.8 million Disney Plus subscribers globally, including India’s Disney Plus Hotstar, which accounts for 45.9 million of the total.
Disney CEO Bob Chapek reaffirmed the company’s target of reaching 230 million to 260 million Disney Plus subscribers by 2024. The stock is up about 3% at midday today.
Netflix, which reported late last month, said it added 8.3 million new subscribers last quarter, bringing its total subscribers to 222 million. That result fell below expectations, and shares fell more than 20% after the company said it expects 2.5 million new subscribers next quarter.

Smashing Wall Street’s expectations

Overall, Disney reported stellar results.
With an expectation of $0.57 per share on revenue of $20.84 billion, Disney impressed. The company actually had earnings of $1.06 per share and revenue of $21.82 billion.
As eToro’s analyst Josh Gilbert said, the company is outperforming in various revenue segments.
“Kicking off 2022, this report offers a lot of positivity for Disney investors, following its weak earnings last quarter. With park revenues returning to pre-pandemic levels, overall company earnings climbing by more than 200% and Disney Plus subscribers continuing to soar, Disney is returning as a conglomerate powerhouse,” he explained to investors.
That’s key for investors since Disney Plus is only part of the company’s huge operation. Overall, the consensus analyst forecast for the stock is near $200 a share within a year, 25% above current levels.

Short-term pain for long-term success

While Disney is making moves to become the top streaming service, Gilbert said that growth is going to cost Disney over the short term.
“Disney Plus is anticipated to continue its expansion into new markets during the next few years, including the Middle East and Eastern Europe, aiming to reach more than 100 million people.”
“Disney intends to spend $33 billion on content in 2022, which will likely boost its long-term growth, but consequently impact short-term profitability. Furthermore, this should aid its main goal of reaching 230 million subscribers by 2024,” Gilbert concluded.

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