1 Major Red Flag With Disney's Latest Earnings That Investors Need to Know

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1 Major Red Flag With Disney's Latest Earnings That Investors Need to Know

Motley Fool2023-08-15

Media and entertainment powerhouse Walt Disney (DIS -0.24%) recently reported financial results for its fiscal 2023 third quarter (ended July 1). Revenue was just over $22.3 billion and adjusted ...

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Revenue was just over $22.3 billion and adjusted ...</p>\n\n<a href=\"https://www.fool.com/investing/2023/08/15/1-major-red-flag-with-disneys-latest-earnings/\">Source Link</a>\n\n</div>\n","source":"fool_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>1 Major Red Flag With Disney's Latest Earnings That Investors Need to Know</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n1 Major Red Flag With Disney's Latest Earnings That Investors Need to Know\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-08-15 06:40 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2023/08/15/1-major-red-flag-with-disneys-latest-earnings/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Media and entertainment powerhouse Walt Disney (DIS -0.24%) recently reported financial results for its fiscal 2023 third quarter (ended July 1). Revenue was just over $22.3 billion and adjusted ...</p>\n\n<a href=\"https://www.fool.com/investing/2023/08/15/1-major-red-flag-with-disneys-latest-earnings/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"ISBC","symbol_name":"投资者银行","start_time":0,"source_url":"https://www.fool.com/investing/2023/08/15/1-major-red-flag-with-disneys-latest-earnings/","article_id":"2359081520","we_media_id":null,"thumbnails":["https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F743950%2Fsurprised-looking-at-laptop.jpg&op=resize&w=165&h=104"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2359081520","pubTimestamp":1692052800,"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"The House of Mouse is facing some serious challenges.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"ISBC":"投资者银行","DIS":"迪士尼"},"translate_title":"投资者需要知道的迪士尼最新收益的1个主要危险信号","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DIS":1,"ISBC":1},"content_text":"Media and entertainment powerhouse Walt Disney (DIS -0.24%) recently reported financial results for its fiscal 2023 third quarter (ended July 1). Revenue was just over $22.3 billion and adjusted diluted earnings per share totaled $1.03. Both figures beat Wall Street expectations. So, it wasn't a surprise that investors welcomed the news, sending the stock higher after the announcement. While Disney might be viewed as a blue chip stock worth owning in your portfolio, I think there is something important to keep in mind that might challenge that perspective.  Disney will continue to face struggles with its steaming operations. Let's take a closer look at this major red flag with the business that investors need to know about. The struggles of streaming The streaming wars have been in full effect, so when it comes to Disney, how the direct-to-consumer (DTC) segment performs in any one quarter gets a lot of attention. In the latest quarter, Disney+ lost more customers than analysts were expecting. However, Disney+ Core (excluding the Hotstar service) added 800,000 subscribers. The total membership count of 105.7 million was up 13% year over year. Disney+ Core's average revenue per user (ARPU) in the U.S. and Canada (UCAN) also increased by 17% to $7.31 compared to Q3 2022. Growing the user base and making more money from users is a good sign, particularly in the more lucrative North American markets. In isolation, those numbers for Disney can be viewed in a positive light. But they don't hold a candle to Netflix, the leader in the industry. During the three-month period that ended June 30, the streaming pioneer added 5.9 million subscribers, bringing the total to 238.4 million. And in Q2, Netflix's ARPU in the UCAN region was $16. This means that despite being a larger and more popular service that also costs more per member, Netflix was able to add more customers than the Disney+ Core service. Disney did just announce price hikes for the ad-free tier of Disney+ from $10.99 to $13.99 a month, slated to be implemented in October. And the management team will follow in Netflix's footsteps to clamp down on accounts that share passwords. That could provide a boost to monetization efforts going forward at the risk of losing customers, however. But the significantly lower ARPU metric for Disney points to how much money the DTC segment continues to lose, posting an operating loss of $512 million last quarter. And in the last 12 months, the division reported an operating loss of $3.7 billion. Kevin Lansberry, interim CFO, mentioned that the hope is for the DTC segment to achieve profitability next fiscal year. But with so much competition in the industry these days, I find this goal difficult to reach. Raising prices will be hard to execute without increasing churn. Moreover, cutting content costs will result in fewer new shows and movies, reducing the value proposition for viewers. Disney's streaming efforts are a world away from Netflix, which reported an operating margin of 18% last year, while producing $1.6 billion of free cash flow.  Looking ahead Bob Iger, Disney's CEO, is focused on finding ways to streamline Disney's operations, a strategy that can be painful in the near term but probably necessary for long-term success. The things that made Disney the dominant media empire that it is today, like its linear TV networks, won't feature as prominently as they did in the past. The company has to position itself for a streaming future. While the rapid rise of Disney+, particularly as represented by its huge subscriber base, is definitely commendable, it's seriously lagging Netflix where it matters most. Investors should pay close attention to the financial trends of the DTC segment.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}