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."
The global oil benchmark surpassed $90 for the first time in more than seven years. This comes as growing tensions between Russia and Ukraine add to concerns about the already-tight market. Jay Hatfield, Chief Investment Officer at ICAP, joined Cheddar to discuss what this benchmark means for the oil industry, and what might happen if Russia does invade its neighbor.
The EU relaxed its Covid travel restrictions for vaccinated individuals among the union's 27 member states, doing away with testing or quarantine requirements for travelers. This comes soon after the World Health Organization said the omicron variant could help make the pandemic more manageable. The new rules take effect February 1st. Bryce Conway, Founder, 10xTravel joined Cheddar's Opening Bell to discuss.
General Motors will be releasing its earnings report on Tuesday. Paulina Likos, investing reporter for U.S. News & World Report, joined Cheddar News to discuss how investors will be eyeing the automaker's forecast as it expands its EV division and attempts to navigate a supply shortage."Investors, first and foremost, are going to want to understand how the company has been able to navigate the chip shortage and how they're going to be able to do that throughout the year to come," Likos noted.
If you're in China you may have noticed that the 1999 film "Fight Club" which features Brad Pitt has somehow got itself a new ending. In the new ending on the streaming service Tencent, the narrator is killed and the explosions are replaced with a black screen saying "the police arrested criminals".It's unclear as to exactly why the changes were made. However, it is the latest example of China playing by its own rules when it comes to entertainment and attempting to control everything its citizens watch. Media Reporter at Axios, Sarah Fisher, joined Cheddar to discuss more.
Neil Young gave the streaming service Spotify an ultimatum demanding that his music be removed if the Joe Rogan experience remained on the platform. Joe Rogan's platform has been questioned a number of times as a result of some of his takes on covid treatment strategies and at times downright misinformation. Ultimately, Spotify decided to stick with Joe Rogan's podcast. The Director for the Business and Entertainment Program at American University, John Simson, joined Cheddar to discuss more.
