To The Moon

$Walt Disney(DIS)$ in FY24 Q2 The jump and plunge of nearly 10% after earnings shows a loosening of the long side, related to the quality of its chips.

DIS's actively traded chips are a mix of less risk-averse investors who think of it as a "blue chip" and more risk-averse investors who think of it as a "growth stock," which has led to a lot of volatility in the post-earnings market in recent times.

Stop treating Disney like a growth stock. Since Bob Iger's return, cost-cutting and efficiency, especially for the streaming division, has been very determined. So Disney's overall revenue has been in the low single digits for three straight quarters, with

1. The trend of decline in the limited network, which has the highest share, is unchanged;

2. Park revenues from the post-epidemic outbreak nearly touched a few growth bottlenecks;

3. Streaming business growth declines amid price hikes and loss cuts

Q2's DTC business losses are shrinking fast, which excludes ESPN+ which is already profitable and is expected to turn around in Q4 (that's the third quarter of this year) with little problem.

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Looking at the entire earnings report, the good points are

1. With the Olympics on the line, ESPN's profit margins in Q4 (that's the quarter of the Olympics) could exceed expectations;

2. Cable media is expected to return to growth in ratings and advertising revenue during the second half of the election;

3. Overseas parks are hot, with operating margins of 27.2% supporting the overall picture;

4. Disney+ exceeded expectations with a net increase of 7.9 million subscribers in North America during the price increase cycle;

5. Content investment is starting to grow again (Q2 6.7b vs Q1 4.5b) and there are rebooting content cycles (e.g. Marvel Universe) to prepare the stockpile for next year and beyond;

6. New launching the new ESPN online in 2025 promises to make up for traditional cable disadvantages;

Poor aspects.

1. The impact of Phase 5 of the Marvel Universe is in doubt, and overall content revenues may fall short of expectations, judging by the few that have been released;

2. The re-entry of content investment into the growth cycle affects margins and further cash flow improvement, with Q2 net free cash flow of nearly $2.4 billion and net cash of almost zero.

3. The core Disney+ subscriber base is not expected to grow next quarter and will grow in Q4, but this target is also subject to uncertainty as content changes;