Smart Money Eating Up Disney Shares
When Disney announced their earnings four month ago, the results just plain sucked. Yes, there was Disney+, but there were no sports which meant ESPN was going to suffer, movie theaters were closed, which meant the highly anticipated Mulan that was scheduled to premiere in March, got postponed, Disneyland and Disney World in the US shut down along with parks in Paris, Shanghai and Hong Kong shut down as well.
During the earnings call, executives provided little clarity about near-term financial effects, but did say that the direct-to-consumer segment would record an operating loss of more than $1 billion in the third quarter. So what did the stock do, it rallies from the $100 and went as high as $130 before pulling back.
Disney (DIS) reported a surprise fiscal Q3 profit late Tuesday and announced "Mulan" will premiere on Disney+ in some markets while revealing a new Star-branded streaming service will launch next year. In extended trading, Disney stock rose.
Analysts saw a loss of 43 cents per share, reversing Disney earnings of $1.35 per share a year ago. Revenue was seen sliding 38% to $12.65 billion, according to Zacks Investment Research.
Results: Disney earnings came in 8 cents a share while revenue tumbled 42% to $11.78 billion. The parks revenue sank 85% to $1 billion, and the segment saw a $3.5 billion impact on operating income due to the Covid-19 closures.
On the news, the stock popped once again. During the conference call, Disney has another new subscription streaming service called Star. The new service is geared towards the international markets, but Disney will integrate the tech and marketing aspects of the brand with Disney+, and it already has a model for this with Disney+ Hotstar in India. Here’s why investors are loving the news.
Rosenblatt Securities' Bernie McTernan said Star could Disney acquire the next 100 million streaming subcribers for Disney and with this move by Disney, they could have 200 million global subscribers by 2022. So to put this into perspective, Disney could have the same amount of subscribers in three years that Netflix has in 13 years.
Although the earnings report came out yesterday, the stock continued moving higher today. And based on the Smart Money buying tons of call options that expire next week, I don't think the move is done.
Despite issues with their parks which are responsible for about 65% of Disney's revenue, based on the price action, it appears price wants to fill the gap at $140.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
Posted Using LeoFinance
