To The Moon

Summarize

Disney (DIS)'s $Walt Disney(DIS)$ Q1 results have risen mainly due to 7,000 layoffs and $5.5 billion in cost reduction plans.

Cost cuts can drive the stock price to rise for a while, but if the stock price continues to rise, it requires Disney (DIS) to perform in the streaming business, especially Disney+.

Cat believes that it is more appropriate to intervene after the Disney (DIS) streaming business, especially Disney+, has improved.

Detailed Discussion 

1. What happened?

After-hours trading on Wednesday (Febary 8), Disney (DIS) released its financial report for the first quarter of 2023.

Performance data show that revenue in the first quarter increased by 8% year-on-year to $23.51 billion, exceeding market expectations of $22.339 billion.

Net profit in the first quarter increased by 11% year-on-year to $1.28 billion, and the adjusted earnings per share were $0.99, exceeding the market expectation of $0.78.

In terms of segmentation of the business, Disney's media and entertainment department increased by 1% year-on-year to $14.776 billion in the first quarter.

However, after excluding operating expenses and other expenses, the department lost $10 million in operating profit in the first quarter.

The revenue of Disney's experience and products department increased by 21% year-on-year to $7.234 billion in the first quarter. Operating profit increased by 25% year-on-year to $3,053 million.

Of course, the market is most concerned about the operation of Disney+. The total number of subscribers of Disney+ reached 161.8 million in the first quarter, exceeding the market expectation of 161.1 million.

However, Disney+ lost 2.4 million subscribers in the first quarter, mainly due to the decline in the number of subscriptions of Disney+ Hotstar products in India.

And due to the strong dollar, the average subscription fee of Disney+ has also decreased.

This has also led to an increasing loss in the Disney (DIS) streaming business, with a loss of more than $1 billion in the three months ending last December.

According to this data, although Disney (DIS) announced its Q1 results, the market interpreted the performance data as a favorable factor by soaring stock prices.

However, the actual situation is not very optimistic. You will understand if the cat analyzes it.

2. Why is this so?

Disney (DIS)'s first-quarter results did not actually highlight much. Although revenue and earnings per share increased year-on-year.

However, the reference data is the performance data for January 2022. At that time, many regions were in a period of epidemic control, so it was not comparable.

The only highlight may be that the revenue of the experience and product department increased by 21% year-on-year in the first quarter, thanks to the return of the theme park business.

Therefore, Disney (DIS)'s first-quarter results should be driven by 7,000 layoffs and $5.5 billion in cost reduction plans.

Cost cuts can drive the stock price to rise for a while, but for the stock price to continue to rise, it requires Disney (DIS) to perform in the streaming business, especially Disney+ services.

What's more, Disney (DIS)'s cost-cutting plan is to help the streaming business make a profit.

3. What should I do next?

To sum up, it is not difficult to see that Disney (DIS)'s Q1 performance has risen mainly due to 7,000 layoffs and $5.5 billion in cost reduction plans.

Cost cuts can drive the stock price to rise for a while, but if the stock price continues to rise, it requires Disney (DIS) to perform in the streaming business, especially Disney+.

Cat believes that it is more appropriate to intervene after the Disney (DIS) streaming business, especially Disney+, has improved.

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