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Disney jumps after earnings reports and lay-off announcement

The shares of the entertainment company rocketed higher today, although sellers quickly emerged, erasing most of the gains.

Walt Disney (DIS) shares rose higher on Thursday as returning CEO Bob Iger detailed a number of reforms at the media and entertainment company.

Iger outlined broad improvements to the group’s operating structure, including 7,000 layoffs, $5.5 billion in cost reductions, and a new three-part organizational structure centered on Parks, Entertainment, and ESPN.

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He said that Disney would reinstate its regular dividend, which had been halted during the pandemic’s height in 2020, before the end of the calendar year.

Earnings better than expected

Disney released positive financial results on Wednesday, powered by theme park growth. The company reported a profit of 99 cents per share for the period ending December 31, above analysts’ average forecast of 74 cents per share. In addition, the 7.8% increase in revenue to $23.5 billion was somewhat beyond expectations.

As a result of cancellations of the Hotstar service in India after Disney lost streaming rights to cricket in that country, the number of subscribers to the Disney+ streaming service decreased by 1% to 161.8 million in the most recent quarter.

Losses in the streaming business increased notably from a year ago to $1.05 billion, but this was better than management had predicted three months earlier.

“We are focused on the success of our streaming business and the return it generates for our shareholders long into the future,” said CEO Bob Iger.

Parks and Adventures sales came in at $8.74 billion, above Wall Street’s forecast and increasing by more than 21% from the previous year, as guests returned to re-open resorts and cruises worldwide, especially in China. The division’s operating income was $3,1 billion, according to Disney.

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Iger, who emphasized the need to focus on innovation — a marked contrast to the leadership of fired CEO Bob Chapek — predicted that funding on content would continue in the low $30 billion area this year. However, he reduced capital expenditure forecasts by almost 10% to $6 billion while maintaining guidance for segment operating income growth in the “high single-digit percentage range” for the whole fiscal year.

The steep uptrend remains intact, and the stock price is making higher highs and higher lows – a clear indication of a bull market. The support is near $112, followed by the 200-day moving average near $102.

Walt Disney daily chart

Walt Disney daily chart, source: author´s analysis,


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