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Author: Alan LittleDate: 2020-08-06

Pandemic hits Disney (NYSE:DIS) earnings, but can 10% stock increase provide hope?

Walt Disney Co. (NYSE:DIS) shares were trading 10% higher on Wednesday after the entertainment giant revealed that it now has a 100m+ subscriber base for its streaming service.

Disney’s business has been decimated by the pandemic as the closure of theme parks and live productions contributed to a $5bn loss for the latest quarter, but its recent expansion into streaming has come at just the right time.

The company posted its financial report on Tuesday, and the numbers held up remarkably well considering the challenges it has faced since March.

Disney said that revenue for the three months to 30th June was $11.78bn, shy of the $12.4bn consensus and a 42% retreat from a year earlier.

Its diluted earnings also slumped to $0.08 per share, but this was better than the $0.64 per share loss predicted before the report.

Disney shares went into the red after the close of play on Tuesday, but it was all change on Wednesday.

Analysts believe that the media conglomerate’s aggressive approach to streaming is paying off less than 12 months after the Disney+ service was launched.

Guggenheim’s Michael Morris added $17 to a new, higher $140 price target and said that the use of Disney assets to support a push into a direct-to-consumer model will play well to investors.

Disney announced this week that the live-action movie Mulan, which was originally slated for a cinematic release, will now debut on Disney+ via pay-per-view in September.

Credit Suisse analyst Douglas Mitchelson was also bullish after upgrading DIS stock to outperform and praising the “innovative and bold” strategy outlined by CEO Bob Chapek.

Disney shares rebounded on Wednesday and were up to around $128 per share by midday on the New York Stock Exchange.

 

Disney Stock

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