The run-up to the second-quarter earnings report feels like it's going to be a storm. The storm is about to hit. It is likely going to be terrible. The shareholders are praying that the foundation is strong enough to hold up.
In the first quarter of this year, the company lost subscribers for the first time in more than a decade, and warned that it would lose 2 million subscribers in the second quarter. It would be the biggest loss in the company's history.
There is a chance the losses will be worse than projected. There are macro economic trends that are worrying. Spending may be slowing down in the U.S. due to concerns of a possible recession and rampant inflation. When people are looking to save money, it could be the first option to be canceled.
Competition is getting more intense. By the end of the year, Discovery+'s entire slate of content is expected to be added to the service, which costs $14.99 a month or $9.99 with advertisements. Disney last week increased the price of Disney+ by $3 to $9.99 a month, but kept its bundled offering of Disney+, Disney+, and Disney Junior at $13.98 a month. More customers for the Disney bundle could be an alternative to Netflix.
Andrew said that it won't be a good story if this quarter is bad.
More than 20 million new subscribers were predicted to be added by the year's end. JP Morgan analyst Doug Anmuth estimated in April that the company would add 17 million in the next five years. He lowered his full year prediction after last quarter.
How much of the bad news has already been baked in to the stock price will be the big question. Less than a year has passed since the company's market valuation went from $300 billion to less than $90 billion.
The markets are going to focus on subscribers for the time being, according to the chief investment strategist of the company. There are a lot of possible outcomes in regards to how much they see and how far they go into the future.
Spencer Neumann jumped in to assure investors that positive growth would come in the third and fourth quarters.
The projected loss of 2 million subscribers in the second quarter doesn't mean losses will continue. There will be net add growth.
A still from “Stranger Things” season three, with the Hawkins crew on the cusp of adulthood and facing enemies old and new.A new season of "The Crown" and the movie "The Gray Man" will help accelerate growth for the service. Latin America, Asia Pacific, and its Europe-Middle East-Africa unit will need to be overdelivered in order to account for the US and Canada.
There is a lot going for it that other streamers don't. All signs point to it making money and that won't change soon. Net income is expected to be around $5 billion this year. The Peacock is expected to lose over $2 billion this year. Disney lost over a billion dollars from its streaming products last quarter.
It is still the largest streaming service on the planet with over 200 million subscribers. It is a big draw for any creator who wants to make content for the biggest audience. It is a significant carrot for advertisers, who will finally be able to tap into the audience by the end of this year, when the company launches an ad supported subscription option for the first time.
Tens of millions of new subscribers will be added by cracking down on password sharing across the globe. More than 30 million people in the U.S. and Canada don't pay for the service.
The major theme of Tuesday's results may be damage control.
The investors are focused on subscribers at the moment, according to the analyst.
All Rights Reserved © 2024
