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Disney shares Q2 earnings preview: analysts predict revenue will fall 11.8%

The Disney share price has dropped as analysts predict its forthcoming Q2 report will a show year-on-year loss of almost $3 billion. However, with streaming surging and life returning to normal, Disney shares have some potential.

  • Disney Q2 earnings expected to drop 11.8% to $15.87 billion.
  • Earnings per share predicted to decrease 12.5%.
  • Streaming services may help Disney shares recover.
  • Ready to trade the Disney share price? Open an account today

Shares in Disney have dropped 2.8% since Monday as the company prepares to announce its Q2 2021 results. However, even with a 12 May closing price of $177.85 - the lowest since February - the overall picture is better than it was.

On 13 May 2020, the Disney share price was $102.92 as the company struggled to cope with the pressures brought on by Covid-19 restrictions. Some of these pressures remain but, as Disney’s Q2 earnings report is expected to show later today, they’re easing.

What will the Disney Q2 earnings report show?

The consensus among analysts surveyed by Reuters is that Disney’s earnings for Q2 will be $15.87 billion. That would be down 2.3% on the $16.25 billion it reported in Q1. Moreover, it would represent a year-on-year drop of 11.8% from 2020’s $18 billion in Q2 revenue.

Based on the current consensus estimate, Disney’s adjusted earnings per share (EPS) is expected to be $0.28 with a diluted EPS of $0.01. That would constitute a drop of 12.5%. These losses are significant but the rate at which they’re occurring is starting to slow.

Covid-19 restrictions remain a problem for the company’s theme parks, cruise ships and retail outlets. However, with vaccinations unlocking large parts of North America and Europe, the pressure is easing.

Which metric will analysts be focused on?

The main focus of Disney’s Q2 FY 2021 earnings report will be its digital services. The number of Disney+ subscribers will be the key metric. Previous figures show that the streaming platform had just over 90 million subscribers at the end of 2020. Recent reports show that, as of March 2021, it has over 100 million.

That’s still less than the 208 million subscribers Netflix has. However, the signs are that Disney+ is closing the gap faster than expected. Netflix’s recent earnings report showed that it added 4 million paid subscribers in Q1 2021. That was 2 million below expectations and, looking forward, the current estimates suggest Netflix will add just 1 million more subscribers in Q2.

If Disney’s earnings report shows an increase of more than 5 million subscribers, it will be growing at a faster rate than one of its main rivals. That could be a positive for Disney shares in the coming months.

A return to normality for Disney resorts will be a point of interest for analysts and traders. However, with restrictions and regulations differing around the world, there may not be much certainty in this area of the business. This could add extra credence to the growth of Disney+ and its potential impact both on the company’s recent earnings and its future share price.

Can streaming help the Disney share price recover?

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This information has been prepared by IG, a trading name of IG Markets Limited. 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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