Disney started with over $116 a share ahead of its earnings call, but that quickly ended as the stock price plummeted $11 per share due to reports of a weak Q3.
The Q2 earnings were mostly positive, with gains made in streaming and improving ESPN+ losses. Most of their goals were met or exceeded.
So why did the stock plummet?
One reason could be that Disney CEO Bob Iger and senior executive VP and CFO Hugh Johnston kept reporting that they expect those gains to go away during Q3.
Several times during the investment call, they mentioned that they expect the third quarter to see a decline due to various factors, including higher wages, pre-opening costs related to Disney Cruise Lines’s upcoming Disney Adventure and Disney Treasure ships, and their new Lookout Cay island. During the call it was also mentioned that there was a “one-time” payout coming, but they didn’t explain what that was.
Other news included increased profits, but they were primarily due to increased prices, which doesn’t sit well with people since Disney is already seen as massively overpriced. Plus, they told investors that theme park attendance was normalizing after the COVID-19 pandemic boom, which meant lower attendance and less money.
Disney’s stock has continued to drop since it was announced that the current Disney Board would remain in power after the proxy battle from Nelson Peltz’s Trian and Blackwell Capital. It stabilized at around $113-$114 but fell again.
Analysts say it could lead to the worst stock drop in 1.5 years.
If the shares drop more than 13.2%, it will be the worst drop since November 9, 2022. According to Market Watch, Disney is “the second-worst performer in the S&P 500 on the day, behind only Builders FirstSource!”
It might only worsen with news that the next few months aren’t good.
What do you think? Comment and let us know!
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