In after-hours trading on Wednesday, Walt Disney Co (DIS.N) alleviated fears about streaming video by adding 7.9 million new Disney+ subscribers from January to March, sending the entertainment giant’s stock up 3.5 percent.
On Wall Street, 5.3 million new Disney+ subscribers were expected. Disney still has a long way to go to meet its multi-year goals, but the expansion was a reaction to Netflix’s decline.
To meet the low end of their objective of acquiring 230 million to 260 million Disney+ subscribers by September 2024, Disney needs to gain about 9.1 million new consumers per quarter on average.
The world’s largest entertainment corporation is betting its future on a streaming TV business to compete with Netflix Inc (NFLX.O), the company that pioneered subscription video.
Last month, Netflix alarmed Wall Street when it revealed it had lost customers in the first three months of 2022 and predicted additional defections through June.
The Netflix results stung media stocks and made investors reconsider their expectations for internet video.
With the help of new releases such as Marvel’s “Moon Knight” series and Pixar’s “Turning Red,” total subscriptions for Disney+, which started in November 2019, have reached 137.7 million.
“In spite of less-than-optimal results overall, because of the positive streaming numbers, Disney will do well,” said Shahid Khan, partner at Arthur D. Little, a technology and management consulting firm. “As households rationalize their streaming choices, given the inflation, Disney+ will become one of the top choices and will become a real threat to Netflix.”
According to IBES statistics from Refinitiv, Disney posted adjusted profits per share of $1.08, missing analyst expectations of $1.19, due to a rise in the effective tax rate on overseas earnings.
Revenue came in at $19.2 billion, missing the consensus forecast of $20.03 billion.
Following protracted pandemic-related closures and visitor limitations, Disney’s theme park industry continues to improve strongly.
The parks division’s operating income was $3.7 billion, up 50% from the previous year.