The offensive horn sounded, Disney's "All in" time has come?

The past year was the first year that Disney's (NYSE:DIS) investor "Pink Bubble" was punctured. The "Cash Cow" paradise business was suppressed by the epidemic to the point of dying. Relying on the fantasy of Disney+, it barely supported the stock price increase, but it still Full of risks.

Since the epidemic, Wall Street has always held a relatively contradictory view of the stock. Although the stock has rebounded sharply after the plunge last spring, it has fallen by 1.04% this year, and the stock price has fallen by 2.25% in the most recent month.

However, as Disney announced the latest earnings data, Wall Street investors sounded the offensive clarion call. Is this a good time for All in Disney?

Disney's earnings report exceeds expectations, Disney+ users grow by 12.4 million

Disney announced the latest financial report after the US stock market on Thursday. The data showed that the company achieved 17.022 billion US dollars in revenue during the reporting period, an increase of 45.5% year-on-year; net profit also increased significantly from last year's loss of 4.721 billion US dollars to a profit of 11.23. Billion US dollars; and earnings per share reached 80 cents, higher than market expectations of 55 cents.

Disney's financial report is excellent, almost all the data exceeded market expectations in all respects. The market also gave a positive response. According to the market data of Investing.com, Disney soared 5.67% after the US stock market on Thursday, to $189.45.

Let’s take a closer look at this financial report. From the data point of view, the biggest performance improvement in the quarter came from the Disney Parks, experience and product divisions, including domestic and international theme parks, cruise ships, merchandise licensing and retail businesses. Revenue for the quarter was US$4.3 billion, more than four times that of the same period last year, and Wall Street’s average forecast was only US$3.9 billion.

Secondly, Disney's media and entertainment distribution business has also seen growth, with sales increasing by 18% year-on-year to $12.7 billion, but it was about $100 million less than analysts expected. The highlight is still Disney+. Disney+ users have increased by 12.4 million, and the number of subscribers reached 116 million as of the end of the reporting period.

In the first six months of 2021, Disney’s direct-to-consumer revenue in the media and entertainment sector increased 57% year-on-year to US$4.3 billion, while operating losses narrowed by 53% to US$293 million. This is largely driven by the growth of Disney+.

Behind the beautiful data, there are still some troubles to be solved

The data is indeed remarkable, but some practical problems that Disney still faces seem to have been selectively ignored by most investors.

Although Disney+ has grown rapidly before, it has recently shown a downward trend. This quarter, the main channel, ESPN+ subscribers increased from 13.8 million in March to 14.9 million in June, and Hulu subscribers increased from 41.6 million to 42.8 million, both of which were lower than market expectations.

Some analysts and investors also raised concerns about a sharp decline in Disney+ subscribers when studying the company's report. As far as the streaming media giant Netflix is concerned, affected by widespread vaccination and the lifting of government restrictions in the second quarter, the number of North American users in the second quarter actually fell by 430,000, while the growth of overseas users also slowed down.

Although Disney+'s performance is slightly better than Netflix, Disney+ streaming media is still in the investment stage, and the company currently does not expect to be profitable until 2024. Moreover, Disney+'s profit margins remained low this quarter. Including Disney’s ABC, ESPN, Disney Channel, FX and National Geographic Channel, revenue increased by 16% from the same period last year, reaching approximately US$7 billion. However, due to the rebound in programming and production costs, operating profit fell by 33% to US$2.2 billion.

In addition to Disney+, the company's current main cash flow is still from the park business. Before the epidemic, the park department contributed 38% of its revenue for the fiscal year ended September 28, 2019. By the first six months of 2021, this The share has declined, but it is still as high as 21%.

This "cash cow" is still not too strong, and the overall recovery is still in the process of making a profit of only 2 million US dollars last quarter. Moreover, since the Delta virus is still raging outside, there is still greater uncertainty in the recovery of this business.