Disney Stock Drops Soon After Hitting a New-52 Week High on Q1 Results

Walt Disney Co. (NYSE:DIS) is best known for providing family entertainment around the world. It was founded in 1923 by Walt Disney and his brother Roy in a small office located in Los Angeles. The two brothers initially produced a short, animated film series called Alice Comedies. Today, Disney is the top media company in the world, with a market value hovering around $340 billion.

Some of the company’s businesses, especially its theme parks, faced disruptions in recent months amid lockdown restrictions to contain the spread of coronavirus. Many were expecting Disney to report a loss for the first quarter. However, the company on Thursday surprisingly reported a profit for Q1, helped by better-than-expected growth at its Media and Entertainment division.

The world’s biggest entertainment company reported an adjusted profit of 32 cents per share for the three months ended January 2, contrary to a loss of 34 cents per share forecasted by analysts. Revenue for the quarter came in at $16.25 billion, down from $20.88 billion in the year-ago quarter. Analysts on average were looking for revenue of $15.93 billion.

Revenue from the Disney Parks, Experiences and Products segment declined 53 percent on a year-over-year basis to $3.6 billion, as Disney theme parks stayed closed during the quarter. Comparatively, revenue from the Media and Entertainment Distribution slipped 5 percent to $12.66 billion.

On the bright side, Disney+ subscriptions reached 94.9 million in the quarter, well above the consensus forecast of 90.7 million.

Speaking on the results, CEO Bob Chapek said, “we believe the strategic actions we’re taking to transform our Company will fuel our growth and enhance shareholder value, as demonstrated by the incredible strides we’ve made in our DTC business, reaching more than 146 million total paid subscriptions across our streaming services at the end of the quarter.”

Disney shares hit a new 52-week high of $193.83 on Friday morning following Q1 results. However, the stock fell nearly 2 percent later in the day on heavy volume. Overall, Disney’s share price has increased more than 33 percent during the past year.