Disney Exceeds Subscriber Expectations – What Marketers Are Saying
disney broken subscribers’ expectations on Thursday when he announced bringing nearly 95 million paid subscribers to Disney+ as of January 2. On other platforms, including Hulu and ESPN Plus, the number of subscribers stood at 146 million.
That streaming growth has been a bright spot for the company, which has struggled with declining revenue from its park operations, many of which have been closed or reduced in capacity for most of the year.
Here’s what five experts had to say after Disney’s earnings report.
Jim Cramer, CNBC show host “mad money“, praised the success of Disney despite the closure of the parks.
“It’s very hard to find a business that can make that much money when most of them are closed.”
Pete Najarian, MarketRebellion.com co-founder, said he doesn’t own the stock right now, but applauded the growth in subscribers.
“I love that name. I feel like it’s stretched a bit. I understand the ecosystem of how they’ve been successful with streaming and when you look at…those numbers…they’re absolutely amazing, and you have to take your hat off to Disney in terms of that report – 146 million. They’re not that far behind netflix if you combine the entire streaming ecosystem, then those are big numbers. The stock did indeed pop up, I immediately left my calls. … Sooner or later they will begin to open. They will start to see parks coming back, cruise ships coming back, and a lot of other areas where they got so much revenue that will absolutely impact the business. But right now it’s all about streaming. I’m more concerned about trying to trade it because I don’t feel like I can own it right now and feel comfortable.”
Shannon Saccocia, CIO of Boston Private Wealth, said she expects more streaming growth to come.
“It’s not inconsistent with the argument we’ve had about Netflix for years. What’s included in that is that some lower-cost international subscriptions are incorporated into that number as well as the annualization of some of the subscribers who were free, previously through the Verizon arrangement, falling off the subscription rolls The reality, however, is that if you take out the international, which is always going to be lower margin, it’s about expanding footprint. We’re seeing the same thing on the Netflix side. The strength of this is that they’ve greatly exceeded subscriber count. The catch here over the next two quarters is to see how many of those subscribers that were initially free remain on subscriber lists. And I think that’s going to be pretty strong.”
Jenny Harrington, CEO and portfolio manager of Gilman Hill Asset Management, highlighted the growth in demand for Disney parks and how it will grow in the years to come.
“We’re definitely looking to 2022. … Post-pandemic Disney will be stronger than pre-pandemic. If you look at 2018 earnings, they were making $7 a share. You … just have to throw away this year’s earnings. You look at 2022, and you can add streaming, you can add Fox, you can add the opening of Star Wars. And, that’s really interesting, you think about all the pent-up demand. I know that a lot of people who had to canceling their trips to Disney. So I think there are bigger things that are interesting to think about at Disney as well. And, one of them is where 2020 took away Disney’s future revenue, that revenue is going to be paid before, maybe in the second half of 2021, and certainly until 2022. I can look at other companies like Apple and I would say the income is paid until 2020. But [with] Disney, I think there’s so much pent-up demand that we’re going to see that happen in 2021 and 2022.”
Jim Lebenthal, chief equity strategist at Cerity Partners, said it makes sense to look beyond lofty valuations right now.
“If you were looking at the multiple on Disney stock this year, stop. I don’t care about 100 times and neither should you. You have to understand, take 2019, theme parks were 45% of operating profit. They’re zero right now…Sometimes you don’t believe people when they say they’re going to increase revenue, but this time you can clearly see how important theme parks are and where the live at the consumer.