The Walt Disney Company is poised for big results and big profits with the long-awaited sequel to Avatar, which released in 2009 and grossed $2.9 billion, topping the list of the highest-grossing films of all time. We had good reason to hope.
And superstar director James Cameron’s Avatar: Waterways was by no means a slouch on its opening weekend. The problem is that US returns fell short of analyst expectations for the film. CNBC.
That perceived poor performance drove Disney’s stock price to a 52-week low on Monday, nearing its lowest level since 2014, perpetuating a cycle in which the company faces a myriad of financial challenges. Disney’s stock has fallen more than 40% over the past year.
In addition to underperforming US ticket sales, ‘The Way of Water’ also saw disappointing ticket sales in China over the weekend. China’s current COVID-19 restrictions, including temporarily closed movie theaters, helped dampen earnings at just over $57 million over the weekend. wall street journalOnly about 35% of China’s cinemas were open when “Water Road” was released.
Moviegoers’ fears of contracting the virus also contributed to the overwhelming drop in attendance.
“The problem is that no one wants to go to the cinema because they’ve been told the coronavirus is so dangerous,” Tony Chambers, Disney’s global head of theatrical distribution, told the WSJ. . “Movie theaters are open, but I don’t have much motivation to go to the cinema.”
Disney’s shares fell nearly 5% on Monday, but were up 1.45% at the close of normal trading on Tuesday.
What is Disney’s financial trouble?
Tinkerbell’s wand may not pack the magical punch it once did, according to the latest World financial report released by Walt Disney Built.
But with the return of Bob Iger last month, the longtime Disney chief who built his reputation on minting gold when it comes to generating profits for the company, a global economic slowdown is looming. Nonetheless, it is raising investor hopes that he can still summon the spark of success. .
Indeed, Disney theme parks are hugely popular and generate a lot of business and profits for the multi-sector Walt Disney Company. % for the same period one year ago.
However, the company’s latest financial report showed that while overall revenue increased, profit margins were well below expectations.Around wall street journalProfit margins for Disney’s domestic parks and experiences business, which includes cruise ships, fell nearly 16 percentage points from the previous quarter to 14.8%, well below analyst expectations of about 20%.
The Journal says it’s common for these margins to fall in the quarter that spans the end of the summer and the beginning of the school year, but this year’s drop is bigger than usual, and how the economic slowdown and recession fears will play out. I pointed out that depending on whether it is, it may indicate future problems. Families spend their time on recreation and entertainment.
“The failure at the park was a big surprise,” said David Goodman, senior analyst at Columbia Threadneedle Investments. Ameriprise Financial He is a major shareholder of Disney, he told The Wall Street Journal.
“The biggest problem is that when the economy picks up and reopens, there seems to be a mismatch between income and spending,” Goodman said. “When you think about the park’s next year, even if demand looks strong now, that’s today, and with the market considering the possibility of a recession, there’s a lot of unknowns.”
Disney’s park profits boost bigger bets
In addition to raising the base admission price, Disney is also increasing park profits by adding new paid services such as the Genie+ pass, which allows visitors to skip the long lines at popular park rides and attractions. I have been working on pushing up. But it also ran into some unexpected problems, such as Hurricane Ian temporarily shutting down Disney World in Florida, causing $65 million in damage to the company, according to The Wall Street Journal. Bigger investments in marketing and events also impacted last quarter’s earnings.
The park’s margins have declined and Disney’s stock has fallen about 35% since the beginning of the year, but the company and its investors are hoping these earnings will offset the severe losses created by other projects. doing.
In the third quarter of this year (the fourth quarter on Disney’s fiscal calendar), the company added 12.1 million Disney+ subscribers and a total of 14.6 million direct-to-consumer customers, exceeding most analyst estimates and just below 2.4 Blown Quarterly Additions From Increased Netflix. According to CNBC, he has 1 million new subscribers this quarter.
Disney’s streaming division, which includes Disney+, Hulu and ESPN+, ballooned to a $1.47 billion net operating loss in the quarter, according to CNBC, despite a surge in subscriber numbers. This was partially blamed on Disney’s lack of “premier access” content, or the lack of theatrically released movies, such as “Black Widow” and “Jungle Cruise,” for which Disney charged an additional $30 to stream. That’s more than double the loss we lost a year ago.”
Disney+ has reportedly lost about $8 billion since its launch.
Disney said in an earnings call just weeks before Iger was reappointed as the company’s chief executive that it expected losses to moderate in the coming quarters, but the statement said Disney’s Even more so that didn’t keep up with the disappointing earnings report to drive the stock price down.