Walt Disney Company Showed Its Ability to Withstand Negative Cycle and Demonstrate Uniqueness

The Walt Disney Company (DIS) reported Q1 FY2022 earnings and streaming-subscriber growth that handsomely beat consensus forecast. Disney said that its revenue for the first quarter of its fiscal year 2022 stood at $21.8 billion after a 34% jump on a yearly comparison basis. Earnings increased to $1.06 a share, well above the 57-cent average of Bloomberg estimates. The company’s famous theme parks and the new Disney+ streaming service delivered big upside surprises, providing a one-two punch that cheered investors and lifted the shares as much as 10% in extended trading.

GAAP diluted earnings per share (EPS) reached 0.63%, surging from $0.02 reported in the same period of 2021, and net income was $1.15 billion. The count of Disney+ video and movie streaming service’s paid subscribers rose to 129.8 million over the reporting period, marking a 37% increase compared to the corresponding timeframe a year ago. ESPN+ users surged 76% to 21.3 million, while Hulu subscriptions grew 15% to 45.3 million.

“... our streaming services ended Q1 with 196.4 million total subscriptions after adding 70.4 million in the quarter, including 11.8 million Disney+ subscribers” — said Bob Chapek, Disney Company’s CEO during the investors call. "This marks the final year of The Walt Disney Company's first century, and performance like this coupled with our unmatched collection of assets and platforms, creative capabilities, and unique place in the culture give me great confidence we will continue to define entertainment for the next 100 years". “Sporting events continue to be the most powerful draw in television accounting for 95 of the 100 most-watched live broadcasts in 2021, and ESPN once again set the bar this quarter with live games across each of our 4 major U.S. sports, including the [revolutionary] Monday Night with Peyton and Eli.” — he added.

These results virtually halved Disney’s apparently bloated valuation numbers in the previous periods, where investors simply credited the company for its uniqueness and Disney's shares surged over 8% in the after-hours trade following the report. Although most valuation metrics remain apparently elevated, this period clearly showed the company is on the fast track to recovery after Covid-19.