The Walt Disney Company missed investor expectations for growth in the fourth quarter of fiscal year 2022, sending shares plummeting Tuesday afternoon as losses mounted for the entertainment giant’s streaming arm, MarketWatch reported.
Despite reporting earnings of $20.15 billion in the fourth quarter of the fiscal year, up from $18.53 billion over the same period last year, Disney missed investor expectations by roughly $1.1 billion dollars, sending stocks diving more than 10% after markets closed, MarketWatch reported. Disney lost nearly $1.5 billion on its Disney+ streaming service, 38% worse than predicted by FactSet analysts despite surpassing expectations for new subscribers by roughly 35%, according to the Wall Street Journal Tuesday. (RELATED: Mark Zuckerberg Takes The Blame For Historic Meta Layoffs: REPORT)
The company’s shares are down 35.5% on the year, performing significantly worse than the broader S&P 500 index, which is down 20% on the year, according to MarketWatch.
“2022 was a strong year for Disney, with some of our best storytelling yet, record results at our Parks, Experiences and Products segment, and outstanding subscriber growth at our direct-to-consumer services, which added nearly 57 million subscriptions this year for a total of more than 235 million,” said CEO Bob Chapek, according to Disney’s earnings report. “The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our [direct to consumer] operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate.”
Chapek also mentioned that the company may need to “[realign] our costs,” potentially indicating that cost cuts are on the horizon for the company, according to the WSJ. Chapek noted that Disney+ will introduce an ad-supported subscription tier on Dec. 8, 2022, joining fellow streaming titan Netflix to include such an option, which launched at $6.99 per month, according to the company’s earnings report.
“Disney is still in the mind-set of go-and-grab more subscribers, whether it’s locally or internationally,” Senior Managing Director Chris Legg of investment bank Progress Partners told the WSJ. “They probably have a few quarters to keep playing that game, but Wall Street is definitely getting less patient with this spend-for-subs model.”
Theme parks set a record high revenue of $7.42 billion in the fourth quarter, but the 36% growth in that division was not able to outweigh losses in the company’s streaming arm, the WSJ reported. Disney+ has lost more than $8 billion since its launch three years ago, and fourth quarter losses more than doubled those from the same period last year.
Disney did not immediately respond to a Daily Caller News Foundation request for comment.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact firstname.lastname@example.org.