Disney Stock Soars After Earnings Beat and Strong Guidance
A Profitable Quarter for Disney’s Streaming Business
Disney’s stock surged over 10% in early trading on Thursday, driven by the company’s impressive fiscal fourth-quarter earnings report. The media giant’s direct-to-consumer (DTC) streaming business, which includes Disney+, Hulu, and ESPN+, swung to a profit, posting operating income of $321 million. This marked a significant turnaround from the prior-year period’s loss of $387 million.
Strong Revenue Growth Across the Board
Disney’s revenue for the quarter came in at $22.57 billion, surpassing Wall Street estimates of $22.47 billion. The company’s adjusted earnings per share also exceeded expectations, reaching $1.14 per share compared to the anticipated $1.10.
A Shift Towards Direct-to-Consumer Services
As consumers increasingly turn to DTC services, media companies like Disney are working to boost margins on these offerings. The company recently hiked the prices of its subscription plans, a trend that has gained traction over the past year. Disney expects its DTC operating income to reach approximately $875 million in fiscal 2025.
Linear Networks Continue to Decline
Meanwhile, Disney’s linear networks saw revenue fall 6% and operating income plunge 38% compared to the prior-year period. Management warned that this decline is expected to continue as more consumers abandon traditional pay-TV packages.
CEO Succession and Industry Challenges
As Disney searches for a successor to current CEO Bob Iger, the company faces significant challenges in the rapidly changing media landscape. The next CEO will inherit concerns such as a potential slowdown in Disney’s theme parks business, which saw revenue rise 1% year over year but operating income fall short of expectations.
Theme Parks Business Faces Challenges
While domestic operating income rose 5% compared to the prior-year period, international operating income plummeted 32% due to weak results overseas. The company cited a decline in attendance and guest spending amid the Paris Olympics and a typhoon in Shanghai. However, Disney expects operating income at the parks to grow between 6% and 8% for the full year 2025, driven in part by the launch of the new Disney Treasure cruise ship line.
Positive Outlook for 2025 and Beyond
Despite the challenges, Disney expressed optimism about its future prospects, forecasting “high single-digit” adjusted EPS growth in 2025 and double-digit earnings growth in 2026 and 2027. The company also plans to repurchase $3 billion in stock and implement “dividend growth that tracks our earnings growth” in 2025.
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