Disney Stock: Surprising Results and a Buy Opportunity

Disney  (DIS) – Get The Walt Disney Company Report released its Q3 2022 results on August 10 – and Wall Street cheered the results. DIS shares, already up over 25% last month, continued their upswing post-earnings.

Here, we’ll take a look at some of the highlights from Disney’s most recent earnings release. We’ll also offer some reasons why Disney looks attractive as a long-term hold.

Figure 1: Disney Stock: Surprising Results and a Buy Opportunity

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(Read more from the MavenFlix: Here’s Why You Should Buy Netflix Stock – According To Wall Street)

Surprising results in a turbulent market

After falling 25% over the first half of 2022, DIS seems to be catching its breath in recent weeks. Its recent rebound has been strengthened by stellar third-quarter results. The company’s revenues grew 26% in Q3, and EPS increased to $1.09 from $0.80 QoQ.

Figure 2: Disney’s Q3 revenues, EPS and net additions.

Disney IR

After beating on both revenue and EPS consensus estimates, Disney shares popped more than 5%. Still, some investors have reservations about the company’s ability to keep providing such blockbuster results, especially given the possible slowdown we are seeing in the US.

Trouble Ahead for Streaming… But Disney Looks Ready

In addition to Disney’s strong topline number, another figure that surprised analysts was Disney+’s net subscriber additions, which beat consensus estimates by a whopping 50%. Disney added about 14 million subscribers to Disney+ in the quarter. The company now boasts 221 million global subscribers across all of its subscription-based platforms.

Even on the back of great results, Disney has shown concerns about the future of streaming. This is clear from the reduction of its 2024 subscriber target for Disney+: the company currently expects to reach the 215 million to 245 million subscriber mark by 2024, down from the 230 million to 260 million goal set previously.

DIS also announced that it intends to raise prices for streaming services and will be launching an ad-supported mode, much in line with what competitor Netflix has recently announced.

DIS: A Buying Opportunity

Down almost 40% from its ATH, Disney appears to be quite discounted at the moment, even with the last month’s rise. With the company on track to report solid earnings for the next several quarters, it is very likely that the stock will continue to appreciate.

Of course, even strongly positioned companies may take a hit if the economy’s current slowdown slides into a more severe downturn.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting MavenFlix)

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