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Disney earnings report: A magic carpet ride or a fall from grace?


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In anticipation for Walt Disney's Q2 earnings report, we explore the state of its share price in a volatile market, the challenges it faces with declining theme park attendance and streaming subscribers.

 

Disney share price forecast and Q1 earnings preview | IG South AfricaSource: Bloomberg

 
 
 Tony Sycamore | Market Analyst, Australia | Publication date: Wednesday 02 August 2023 

Anticipated earnings report: A deep dive into Walt Disney's performance

Standing as a prominent leader in the global entertainment industry, The Walt Disney Company expertly orchestrates a wide range of business operations. With its expansive and diversified portfolio, Disney has created an enviable stronghold in the market, setting high competitive standards that few can rival.

As the entertainment behemoth continues to shape and influence the entertainment industry, the eyes of the world are keenly set on their upcoming second quarter (Q2) earnings announcement, scheduled for after market close on Wednesday, 9th August 2023.

A recap of Walt Disney's performance

Walt Disney's Q2 revenues and profits generally met market forecasts. The top line saw a 13% boost, rising from $19.2 billion last year to $21.8 billion. Adjusted earnings per share, excluding non-recurring items, fell 14% to $0.93, while the company's unadjusted earnings climbed from $0.26 per share to $0.69 per share.

Looking closely at the figures, the parks division expanded by 17%, whilst the core media business saw a modest growth of 3%. Concerningly, the streaming segment shed approximately four million subscribers during the three months, reducing total subscriber figures from 163.17 million to 157.8 million.

"We're pleased with our achievements this quarter, including the enhanced financial performance of our streaming business, which reflects the strategic changes we've been implementing throughout the company to realign Disney for sustained growth and success," remarked Robert A. Iger, Chief Executive Officer.

Disney Q2 results for 2023 chart

 

A-snapshot-of-Walt-Disney-Q2-Results.pngSource: Walt Disney

Anticipating Walt Disney's Q2 results

Investors will be looking to validate recent reports of declining attendance at Disney’s Theme Parks over the past few months. They will also seek to determine the impact of fewer NBA games and the weakest advertising market in nearly fifteen years on revenues.

The market will closely monitor the anticipated loss of around 2.6 million streaming subscribers this quarter and how costs are being managed. Underperforming recent releases such as "The Little Mermaid" and "Elemental" are expected to dampen studio performance.

Key financials

As for Wall Street's expectations for the forthcoming results, they are as follows:

  • Earnings per share: $0.98 adjusted vs $0.93 in Q2
  • Revenue: $22.49 billion vs $21.8 billion in Q2.

Walt Disney’s revenue

 

Walt-Disney-Revenue-020823.pngSource: TradingEconomics

Walt Disney's share price analysis and projections

Walt Disney’s share price witnessed a 58% drop from its $203.02 high of March 2021 to its late last year low of $84.07. It continues to trade slightly above its Covid crash low of $79.07.

Walt Disney weekly chart

 

Walt-Disney-Revenue-daily.pngSource: TradingView

As depicted in the daily chart below, the share price of Walt Disney has been boxed in a range below $105 since March of this year and above support at $84.00. While a break lower should not be pre-empted, the price action has been lacklustre, and a sustained breach of support at $84.00 could lead to a retest of the Covid crash low of $79.07.

To mitigate the downside risks, the share price must first reclaim the resistance coming from the 200-day moving average at $96.00, followed by resistance from recent highs in the $103/105 area.

Walt Disney weekly chart

 

Walt-Disney-Revenue-weekly.pngSource: TradingView

Earnings report release and share price summary

Walt Disney is scheduled to report its Q2 earnings after the market closes on Wednesday, 9th August 2023. Ahead of the release, the share price continues to trade heavily, with the Covid crash low looming in sight.

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