Disney Earnings Beat Sparks Investor Optimism

Shares of Walt Disney were up nearly 6% in early trade Friday after beating profit expectations, with investors looking ahead to next Tuesday’s launch of the Disney+ streaming video service.

Analysts had been expecting earnings of $0.95 a share, so investors got a pleasant surprise when Disney reported earnings of $1.07 a share. The company also beat revenue estimates, reporting $9.10 billion in revenue versus expectations of $9.04 billion.

One downside to the earnings report is that the $1.07 a share was down 28% from the same quarter last year, when Disney reported earnings of $1.48 a share. Still, investors were upbeat as they looked ahead to the November 12 launch of Disney+.

The streaming video service, which is planned to launch with hundreds of classic Disney titles, some that haven’t been seen in decades, is being seen as a huge growth driver in the coming quarters and years. Analysts also feel that Disney owned content such as Star Wars could make a big difference to growth.

The service has had little marketing, but a small test in the Netherlands was “quite successful” according to Disney CEO Bob Iger. He also said the demographics of those using the service was “far broader” than expected.

Analysts are now saying the Disney+ platform could have 8 million subscribers by the end of 2019, and 21 million by the end of Disney’s fiscal 2020. At the expected $6.99/mo subscription price that would give Disney nearly $1.8 billion in annual subscription revenue.

Disney shares are up 25.3% in 2019, outpacing the Dow Industrials by nearly 7%.