Despite the fact that Disney’s adjusted earnings per share for the March quarter surpassed Wall Street’s expectations, the company’s stock price took a tumble as investors grew concerned about the future of the entertainment giant. The decline in Disney shares was 9.5% to $105.41 per share by 11:30 a.m. ET, following a 29% increase in stock value earlier in the year.
Disney’s theme parks business showed growth in the first quarter of 2024, with revenue and segment operating income increasing by 10% and 12% respectively. However, projections for the coming quarter are predicting little change from the previous year due to factors such as decreased global travel following the peak of COVID-19 pandemic and rising costs and inflation that are expected to impact profits.
On the other hand, Disney’s linear TV business, excluding ESPN, experienced an 8% decline in revenue and a 22% fall in operating income due to nonrenewal of carriage agreements with certain networks and lower advertising revenue. In contrast, Disney’s streaming segment reported its first-ever operating profit with Disney+ and Hulu platforms showing signs of progress.
Despite this positive development in streaming, Disney still reported an overall net loss for the quarter due to a one-time charge of $2.05 billion for goodwill impairments related to Star India and unspecified entertainment linear networks resulting from a merger deal with Reliance Industries to combine Star India operations with Viacom18 in a new joint venture. CEO Bob Iger acknowledged that the road to profitability in streaming will not be straightforward but it is promising nonetheless.
