Disney exceeds earnings expectations; stock prices rise during after-hours trading

Walt Disney has exceeded Wall Street's earnings expectations, driven by strong results at its theme parks and ongoing cost-cutting efforts. The company also announced a $1.5 billion investment in Epic Games, the creator of Fortnite, signaling a significant move into the world of gaming. Disney plans to create a "huge Disney universe" in which consumers can play, watch, shop, and engage with characters and stories from its various franchises.

This announcement marks another attempt by Disney to enter the interactive entertainment space. In 2016, the company shut down its Disney Interactive Studios and shifted to licensing its characters to outside game companies. The decision to invest in Epic Games suggests a renewed focus on developing its own gaming experiences.

Shares of Disney surged by 7% in after-hours trading following the earnings report. The company also authorized a $3 billion share repurchase program and declared a dividend increase of 50%. Disney reported earnings of $1.22 per share, surpassing analysts' forecast of 99 cents per share. However, quarterly revenue was slightly below projections.

Disney has been under pressure from activist investor Nelson Peltz, who is seeking improved performance in its streaming business, box office success for its movies, and more details about plans to make ESPN a dominant digital platform. The company's streaming business, including Disney+, reduced its operating losses to $138 million in the quarter, a significant improvement compared to the previous year. The Disney+ service lost 1.3 million subscribers after a price increase in October, but the company expects to gain 5.5 million to 6 million subscribers in the second quarter.

Disney's theme park unit reported record revenue, operating income, and operating margins, fueled by the opening of new attractions in Hong Kong and Shanghai. However, the Entertainment segment, which includes traditional TV, streaming, and film, experienced a 7% drop in overall revenue due to lower ad revenue at ABC and decreased fees from cable subscribers.

Overall, Disney's strong performance in its theme parks and cost-cutting efforts, coupled with its investment in Epic Games, indicates the company's commitment to growth and expansion in various entertainment sectors.


More from Press Rundown