By Yasin Ebrahim
Investing.com - Walt Disney (NYSE:DIS) reported Thursday an unexpected first-quarter profit after revenue topped expectations and its streaming services racked in more subscribers
Walt Disney shares gained 1.99% in after-hours trade following the report.
Walt Disney announced earnings per share of 32 cents on revenue of $16.25 billion. Analysts polled by Investing.com anticipated a loss of 33 cents on revenue of $15.91B.
Walt Disney shares are up 5% from the beginning of the year, still down 0.22% from its 52-week high of $191.23 set on February 11. They are outperforming the Dow Jones which is up 2.69% from the start of the year.
The company's streaming service Disney+ racked up 94.9 million users from 73 million in the prior quarter, topping estimates for 90.7 million, while ESPN subscribers of 12.1 million were ahead of estimates for 11.5 million. Hulu subs were up 30% to 39.4 million.
Total direct-to-consumer subscribers of 146.1 million topped consensus estimates of 143.1 million even as the average monthly revenue per paid subscriber for Disney+ decreased from $5.56 to $4.03.
"Direct-to-Consumer revenues for the quarter increased 73% to $3.5 billion and operating loss decreased from $1.1 billion to $466 million. The decrease in operating loss was due to improved results at Hulu, and to a lesser extent, at Disney+ and ESPN+," the company said.
The ongoing strength in its streaming business comes after the company doubled down on content following its announcement late last-year to streamline the organization.
Its theme parks business, however, continued to suffer a hit from the impact of the Covid-19 pandemic.
Parks, experiences and products revenue for the quarter decreased 53% to $3.59 billion, and its media and entertainment distribution business saw revenue fall 5% to $12.66 billion.
"The most significant impact was at the Disney Parks, Experiences and Products segment where since late in the second quarter of fiscal 2020, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended," the company said.
Looking ahead, Investing.com's analyst Haris Anwar believes investors should wait for a pullback as the upside from its streaming business has been prices into the stock.
"Disney, with its core revenue generating units still under pressure, is a bet on the reopening of the economy and a success of its streaming product. That business is firing on all cylinders with explosive growth in new subscribers. If that trend continues, it will clearly show that Disney is winning in streaming wars. These two catalysts are very much reflected in the share price, making it tougher for the stock to continue to perform strongly from here. Investors should wait on the sidelines for a better entry point in our view," Anwar said.