Disney Shares Jump 6% After Positive Earnings Talk

Fourth quarter earnings from Walt Disney saw its shares jump 6% after hours. 

DIS – Daily Chart

DIS – Daily Chart

DIS shares were set to jump across $100 on Thursday at $105. Positive earnings talk from management could see further gains to target the $110 level and beyond. 

In an interview with CNBC, Walt Disney CEO Bob Iger announced that the company would acquire a $1.5 billion minority equity stake in Epic Games, Fortnite’s publisher. 

The two companies plan to create a games and entertainment universe, likely related to Disney’s previous plans for a metaverse. 

“It’s not just our parks where we’re creating new opportunities for consumers to engage with the characters and franchises they love,” Iger said in an analyst call. In our collaboration with Epic Games, we’re creating a transformational games and entertainment universe that integrates Disney’s characters into Epic’s cultural phenomenon, Fortnite. Consumers can play, watch, create, and shop for digital and physical goods.  

The move will be Disney’s most significant entry ever into the world of video games. Iger added, “Younger audiences, in particular, are huge consumers of video games. In fact, among millennials, Gen Z and Gen Z is a significant amount of time on screen-based platforms, playing video games. This new universe from Disney and Epic provides us with a tremendous opportunity to not only meet more consumers where they are but to allow more audiences to cultivate a bond with Disney’s iconic brands and franchises, including Marvel, Star Wars, and much more.” 

Shares in Disney were also boosted by the announcement of a 50% higher dividend and a new share buyback program. Disney was motivated by record results at its theme parks and continued to cut costs after laying off 7,000 staff last year. 

The company has been under pressure from activist investor Nelson Peltz, who wants to see Netflix-like profit for its streaming business, better box-office performance for its movies, and more details about its plans to make ESPN a dominant digital platform. 

Disney reaffirmed guidance that the streaming business would reach profitability by September. It also reduced streaming operating losses to $138 million in the quarter, a significant improvement over a year ago, when it lost almost $1 billion. Average monthly revenue per Disney+ user rose 14 cents.

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