Reportshares, a Walt Disney Company, fell Thursday as the media and entertainment giant warned that rising inflation and supply-chain snarls might lower near-term profits, casting a cloud over a better-than-expected tally of subscriber addition to its Disney+ streaming service.
In the whole of the quarter, Disney increased by 7.9 million subscribers, bringing ESPN+ to 22.3 million paid subscribers and Hulu to 4.5.6 million, the total total subscriber total for its Disney+ streaming services surpassed 137.7 million, surpassing analysts'' estimates.
Revenues for Parks and Experiences rose to $6.65 billion, surpassing the Street''s $6.3 billion estimate, and increased by more than half from last year as visitors returned to re-open resorts and cruises around the world, particularly in Hong Kong and the United States.
Disney said it intends to meet its goal of having total subs in the range of 230 million to 260 million in September 2024, although that requirement would include a 9.1 million new members each quarter.
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Disney''s adjusted profit of $1.08 per share stalled expectations, and CFO Christine McCarthy told investors that "it''s very difficult to accurately predict the possibility financial impact due to the fluidity of the situation" in terms of inflation and supply disruptions, adding to concerns about the increasing costs of attracting each new streaming subscriber.
"We''re very attentive to our content cost growth," CEO Bob Chapek told investors on a conference call late Wednesday. "So we think they move together. It''s obviously a balancing act, but we believe that excellent content will drive our subs, and those subs then in scale will drive our profitability."
Disney shares were significantly lower in pre-market trading to indicate a $100.00 opening bell price, a move that would extend the stock''s year-to-date decrease to 35.5%.
"Disney achieved more consistent results this quarter, after the last few had been somewhat less predictable," said BMO Capital Markets analyst Daniel Salmon, who has a "market perform" rating with a $135 price target on the stock. "There was a little more emphasis on profitability in (direct-to-consumer), but Disney+ is still launching new countries and is less mature than Netflix, thus we continue to see a growth mode largely intact."
The largest streaming company on Netflix (NFLX) - Get Netflix, Inc. Reportrevealed it had lost 200,000 subscribers in the first three months of the year, significantly missing the Street consensus forecast of a 2.5 million increase, bringing the total total to 221.64 million. The group hopes to lose another 2 million by the end of the second quarter.
According to Netflix, around 700,000 were caused by reducing the service in Russia, but the bulk of the exodus was attributed to rising prices, increasing competition, and password sharing. Netflix has estimated the number of domestic enterprises worldwide to over 100 million.