Disney Stock Surges 8% After Earnings Report, Raised Guidance, and Cost-Cutting Progress
Disney witnessed a significant surge of up to 8% in after-hours trading on Wednesday, propelled by an upbeat earnings report that included an upward revision of guidance and promising updates on the company’s cost-cutting initiatives.
Key Points:
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Disney’s anticipated earnings per share for fiscal year 2024 stand at around $4.60, reflecting a substantial 20% increase from the previous fiscal year.
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The conglomerate highlighted its robust cost-cutting efforts, revealing a $500 million reduction in costs during the first quarter. This progress positions Disney well to meet or even surpass its ambitious cost-cutting target of $7.5 billion by the end of the fiscal year.
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Enhanced revenue from theme parks significantly influenced Disney’s positive guidance, with the experiences division achieving record revenue and operating income of $9.1 billion and $3.1 billion, respectively.
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In the first quarter, Disney reported nearly $23.6 billion in revenue, a slight uptick from the same period last year when it recorded $23.1 billion.
Additional Insights:
- Disney’s strategic partnership with Fortnite-maker Epic Games was announced in conjunction with its earnings report. As part of this collaboration, Disney will work with Epic Games on new games and invest $1.5 billion to acquire an equity stake in the gaming company.
Background:
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The surge in Disney’s after-hours stock performance brings its shares to levels not seen since February of the previous year. Disney has been actively focused on cost-cutting measures, including multiple waves of layoffs in 2023. The company, amid streaming challenges, managed to reduce its streaming losses in the first quarter of 2024, and it aims to further boost Disney+ subscribers by restricting password sharing on its platform by March.
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Disney-owned ESPN is exploring new revenue streams, preparing to launch a sports streaming service in collaboration with Fox Corporation and Warner Bros. Discovery. The move reflects Disney’s commitment to diversifying its offerings and adapting to evolving market dynamics.