Disney share prices fell on Tuesday following the release of the media titan's quarterly earnings report. The company's stocks were trading more than 2.5 percent up in the afternoon but fell sharply during after-hours trading.
According to the report, earnings per share fell from $1.87 from the third quarter of last year to $1.35, while analysts had expected a much lighter tumble to $1.75. Revenues also underperformed, reaching just $20.25 billion instead of the $21.47 billion anticipated by analysts.
The earnings report comes amid major shifts in Disney's business. This is the first quarter that takes into account the company's acquisition of 21st Century Fox, which was completed in late March. It also comes as Disney ($DIS) ramps up for the launch of Disney+, a streaming network that's meant to compete with Netflix.
Disney's studio entertainment — which handles its blockbuster films like "Aladdin" and "Avengers: Endgame" — saw its income grow to $3.8 billion this quarter.
While the company's direct-to-consumer business also surged, Disney attributed its operating losses to increased investment into ESPN+, a live sports streaming service, and the launch of the Disney streaming network, among other factors.
The company is hoping that latter platform will create a new revenue stream for its widely-popular franchises.
"This year, with the strongest year in the box office, in the company's history, I think that is by design," Andrew Freedman, managing director at Hedgeye Risk Management, told Cheddar. "All these big movies that are getting released are going to be used to drive acquisition for their Disney+ service next year."
He added that his company has maintained its expectation that Disney will reach 20 million subscribers in its first 12 months.
Disney also reported that its parks and experiences revenues grew by 7 percent, to $6.6 billion, but that area of its business does have vulnerabilities.
"We've been in this rip-roaring bull market for 10 years," said Freedman. "Make no mistake, Disney is consumer-mediated. It's a cyclical company. The theme parks have been driving a lot of the operating business and a lot of the upside for them. So to any extent you see a weakness in the consumer, it's going to hurt Disney."
General Motors reported its Q4 earnings Tuesday. While chip shortages impacted sales and revenue last quarter, Paul Jacobson, GM Chief Financial Officer, told Cheddar chip availability has gotten better since Q3. This is crucial as GM has pivoted its focus toward electric vehicles. It recently announced it will be building a new battery plant in Michigan, making $35 billion in EV investments, and producing a million electric vehicles by 2025.
Google’s philanthropy arm, Google.org, recently announced a $10 million grant for the AARP Foundation to aid in teaching digital skills to low income older workers. As the implementation of hybrid work expands, a greater emphasis is being placed on helping workers 50 years old and up — especially among women and people of color — to be digitally literate in order to keep the workplace generationally diverse. Lisa Marsh Ryerson, president of the AARP Foundation, joined Cheddar News to talk about the curriculum of the partnership. "Those of us who are 50 and older are not digital natives, so we do have a learning curve that we have to address," she noted.
AT&T announced earlier today it is spinning off its media properties in WarnerMedia in a merger with Discovery in a $43 billion deal.Scott Rostan, founder and CEO at Training The Street, joined Cheddar to talk about what the unwinding of the telecom giant's Time Warner media properties means for investors. "I think the investor sentiment is they're digesting the new information, and they're looking into the dividend, especially the reduction of the dividend," said Rostan, noting the transaction allows AT&T to focus on its core telecommunications business.
Greg Bishop, Senior Writer for Sports Illustrated, joins Cheddar News' Closing Bell, where he says Tom Brady's legacy is all about 'progress' and expects the future Hall of Famer to bolster his entrepreneurial ventures following his retirement.
Anthony Saccaro, Founder and President of Providence Financial, joins Cheddar News' Closing Bell, where he elaborates on why he is excited that the market is beginning to rebound and believes February has the potential to be a good month after a turbulent January.
A 2021 report from UK Research and Innovation found that the shipping industry makes up at least 2.5 percent of the world's total CO2 emissions. It's a problem that energy solutions company, Leclanché, is trying to solve. Founded in 1909, the company has been developing and producing batteries for more than 100 years. Today, Leclanché's lithium-ion battery is used to electrify not just ships, but also railroad locomotives, trucks, and specialty vehicles. Cheddar News spoke with Pierre Blanc, chief technology and industrial officer of Leclanché, to discuss.
Amazon is betting that ammonia could be the fuel of the future, participating in a Series A round for the Brooklyn-based company Amogy in December. Amogy aims to de-carbonize transportation with a clean energy system that uses ammonia as a renewable fuel. Amogy is partnering with Amazon on its first commercial product - an ammonia-powered cargo-shipping vessel. Amogy CEO Seonghoon Woo joins Cheddar Climate to discuss.
