Disney Shares Fall As Streaming Uncertainty Intensifies
Following Disney’s Q2 earnings call, shares of the company fell as much as 8% in trading this morning.
While Disney’s earnings showed progress in their efforts to cut costs and their streaming losses narrowed, it wasn’t enough for investors.
Analysts cited a weak advertising outlook and uncertainty over whether Disney’s streaming business can be profitable as potential red flags for the company.
All eyes have continued to be on Disney+, which missed its subscriber projections. While Wall Street analysts had expected the service to grow subscribers by less than 1%, Disney’s total number of subscribers instead fell 2%.
A New Streaming Strategy
On a positive note, the company narrowed its streaming losses by $400 million, which was down 26% year over year.
Additionally, Disney said it planned to remove content from Disney+ to cut costs while raising prices on its ad-free Disney+ tier.
With the announcement that Disney will be combining the libraries of Disney+ and Hulu into a “one-app experience,” the future of Disney+ is about to look very different.
The company, however, finds itself stuck between the diminishing returns of linear networks and the current unprofitability of the streaming sphere.
Reason For Optimism
Despite this, some Wall Street analysts remain optimistic about the company’s long-term prospects.
“The long-term profit picture should be brighter than the market knows and thus we think the stock is undervalued,” said MoffettNathanson senior analyst Michael Nathanson.
How Disney navigates the shifting media landscape will be important not just for the company’s future, but for the entertainment industry as a whole.
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