The (Walt Disney)，the diversified international family entertainment and media company established since 1923 will release its Q2 2023 financial results on May 10 (Wednesday), after market close. The company operates through two main segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP). The former covers the company’s global film, television and distribution activities, while the latter includes parks and experiences and consumer products.
Fig.1: Walt Disney’s revenue (in billions of US dollars). Source: Extra
Created by Walt Disney 23.5 billion dollars Q1 2023 sales increased 16.67% from the previous quarter and above 7.75% from the same period last year. According to the official report, 8.7 billion dollars revenue was generated from the Disney Parks segment, up 21% from the previous quarter. This also reflects the growth in its segment’s operating income 25% (q/q) to 3.1 billion dollarssupported by higher guest volumes and guest spending at hotels, parks and cruises.
Figure 2: Revenue and operating income, Disney Media and Entertainment. Source: Walt Disney
Conversely, Media and Entertainment Distribution generated total revenue growth of just 1% to $14.8 billion for the quarter. Both domestic and international channels reported losses, leading Linear Networks to decline -5% (q/q) to $7.3 billion. Operating profit in this segment also fell -16% (q/q) to $1.3 billion. Despite Direct-to-Consumer (DTC) reporting a 13% quarterly gain to $5.3 billion, its operating loss widened to $1.1 billion (previously $0.59 billion) after higher program and production costs and a decline in advertising revenue. These costs were too high to the point that they could not be fully offset by growth in subscription revenue and decline in marketing costs.
Fig.3: Disney Plus subscribers. Source: Extra
The company reported a loss of approx 2.4 million for Disney+ subscribers 161.8 million in the previous quarter, which is believed to be a result of the streaming service’s recent price hike. Its other DTC products, ESPN+ and Hulu, scored a 2% increase in subscribers 24.9 million and 48.0 millionrespectively
Fig.4: Average monthly revenue per paid subscriber for DTC products. Source: Walt Disney
In terms of average monthly revenue per paid subscriber, Disney+ posted losses in both its domestic and international segments -2% and -4%to $5.95 and $5.62while ESPN+ and Hulu were up 14% and 2%to $5.53 and $12.46respectively
Giant. 5: Walt Disney Co. Reported Revenue and EPS. versus an analyst’s forecast. Source: CNN Business
Measures to reduce costs they are top priority for the Walt Disney Company amid the threat of recession. The company will restore its third wave of 7,000 layoffs before the beginning of summer. There will also be $3 billion in content spending cuts and other non-content cuts, hopefully turning the streaming business into a profitable one in the long run.
Even the analysts’ forecasts do not look optimistic. Consensus estimates for sales stood Walt Disney $21.8 billiondown -7.23% from the previous quarter. In the same period last year, sales were $20.3 billion. EPS It was expected to remain flat $0.95almost the same as in the previous quarter ($0.99) and down -12% from the same period last year.
Technical analysis:
#Disney (DIS.s) share price remains consolidated at a relatively low level from the second half of 2022. Last year it recorded the lowest point at $84.05which together with the March 2020 low ($79.05) forms a solid support zone to watch if the asset breaks $91.50 previous. A break below the blue support zone may indicate more bearish pressure towards further support v $63.80. On the contrary, $105.60 serves as the closest resistance. A break above this level may encourage bulls to test $117.75the highest point recorded this year, followed by $126.40 and the dynamic resistance of the 100-week SMA.
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Larince Zhang
Market analyst
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