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Disney just surpassed Netflix in ‘total’ number of subscribers

Disney surpassed Netflix in subscribers

Shares of Walt Disney Co (NYSE: DIS) are up 7.0% in extended trading after the entertainment conglomerate reported strong results for its fiscal third quarter.

Key takeaways from Disney Q3 earnings report

  • Net income printed at $1.41 billion versus the year-ago $923 million
  • Per-share earnings of 77 cents were much better than last year’s 50 cents
  • Adjusted EPS came in at $1.09, as per the earnings press release
  • Sales jumped 26% on a year-over-year basis to $21.5 billion
  • FactSet consensus was $97 cents of EPS on $20.99 billion in sales
  • Added 14.4 million subscribers to Disney+ versus 10 million expected

Disney ended Q3 with 221 million total subscribers across its streaming services – more than 220.7 million Netflix had as of last month. Reacting to Disney Q3 results on CNBC’s “Closing Bell: Overtime”, Rosenblatt Securities’ Barton Crockett said:

They’re putting very good subscriber growth. I think there’s been some debate about who’s the strongest grower in subscription video on demand. And the answer is clear by now, it’s Disney.

Forecast, ad-support, and price hike

The mass media company lowered its long-term forecast for Disney+ subscribers by 15 million and now expects up to 245 million subscribers on its flagship streaming service in 2024. It, however, remains confident that Disney+ will be profitable by then.  

Also on Wednesday, the NYSE-listed firm said it will launch an ad-supported tier on Disney+ on December 8th. Consequently, the non-ad subscription will then cost more. Crockett added:

Disney is underexposed to advertising relative to its peers because its TV networks are overexposed to affiliate fees and then they’re underexposed to TVs because they have more theme parks.

He does not see a mild recession as a threat for the Disney stock.  

Other notable figures in Disney Q3 results

  • Media and entertainment sales went up 11% YoY to $14.11 billion
  • Parks and product sales went up 70% YoY to $7.39 billion
  • Consensus was $14.2 billion and $6.75 billion respectively
  • DTC brought in $5.06 billion versus $5.17 billion expected
  • Television networks brought in $7.19 billion – ahead of estimates

Content sales and licensing generated $2.11 billion in revenue; missing experts forecast by $30 million. Crockett further said:

This is a company that’s doing great in theme parks and has a great set up in streaming. It’s going to be an earnings driven story. And our take on Disney is that there’s a lot to propel the earnings from here.

Disney shares are now down nearly 25% versus their year-to-date high.

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