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Disney shares slump as Q2 earnings collapse

We look at the key figures behind Disney’s second quarter results release.

Disney share price: Q2 results in focus

Entertainment giant Disney (DIS) on Tuesday joined a growing list of companies to report a precipitous decline in earnings as a result of the coronavirus (Covid-19) pandemic.

Overall, on a year-over-year (YoY) basis, the Walt Disney Company saw its bottom-line figures collapse, while revenue actually came in higher during the second quarter. Specifically, for the quarter ending 28 March, 2020:

  • Revenues came in at $18,009 million, up 21%
  • Total segment operating income hit $2,416 million, down 37%
  • Net income from continuing operations collapsed 91%, to $475 million
  • Diluted earnings per share (EPS) from continuing operations came in at 26 cents per share, down from $3.53 per share in the quarter ending 30 March, 2019
  • Finally, free cash flow (FCF) fell 30%, to $1,910 million

Looking forward, Disney’s Chief Executive Officer, Bob Chapek said:

'While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position.'

'Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November,’ Mr Chapek went on to note.

Indeed, the impact of the coronavirus was more pronounced in certain parts of the business than in others.

Disney Parks, Experiences and Products, for example, were particularly impacted during the quarter, with the entertainment giant being forced to close its theme parks, retail stores and suspend its cruise ship sailings, as a result of the coronavirus.

'We estimate the COVID-19 impacts on operating income at our Parks, Experiences and Products segment was approximately $1.0 billion primarily due to revenue lost as a result of the closures,’ the company flagged.

Elsewhere however, Disney did demonstrate its hallmark ‘resilience’ – with the company's Media Networks revenues and income rising during the quarter. Here, Disney posted overall revenues of $7,257 million (+28%); against segment operating income of $2,375 million (+7%).

Disney’s answer to Netflix – Disney+ also proved popular – hitting 33.5 million subscribers, as of 28 March, 2020.

Netflix, by comparison, currently has 182 million paid subscribers.

In response to Tuesday’s results release, investors bid the Disney (DIS) share price lower in after-hours trade. At the time of writing the stock was down 2.09%, to $98.95 per share.

How to trade Disney stock

What do you make of this market announcement: do you see a bullish or bearish opportunity? Trade accordingly. You can use CFDs to trade Disney and other stocks such as Netflix – LONG or SHORT through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) Disney using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘DIS’ or ‘Disney’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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