The Walt Disney Company reported a strong second quarter in 2024, with a 30% increase in adjusted earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More, raising the full-year target to 25%. Significant contributions came from the Experiences segment and the streaming services, with the latter reaching profitability this quarter under the leadership of Alan Bergman and Dana Walden. The company anticipates a softer third quarter due to seasonal variations but expects continued growth in streaming. Disney+ recently integrated Hulu and plans to add ESPN content by year-end. Theatrical releases such as “Kingdom of the Planet of the Apes” and upcoming films like “Moana 2” and “Avatar 3” are expected to bolster earnings. FX’s “Shogun” and sports programming like the NCAA Women’s Final Four have driven viewership highs. Strategic investments in theme parks and new experiences are expected to drive future growth. Overall, Disney remains on track with its strategic priorities, emphasizing both direct-to-consumer initiatives and cost-efficiency measures.

Insights

• Disney’s strategy focuses on integrating streaming with traditional content delivery.
• Seasonality affects performance, highlighting the importance of strategic planning.
• Long-term investments in content and infrastructure are key to sustained growth.

The Essence (80/20)

• Streaming and Experiences Segments: These are critical for Disney’s current and future revenue, emphasizing the shift towards direct-to-consumer models while maintaining strong traditional business segments.
• Content Strategy: The focus on high-quality, diverse content from various studios and franchises drives both immediate earnings and long-term customer retention.
• Strategic Investments: Ongoing developments in theme parks and streaming technology are designed to enhance user experience and expand market reach.

The Action Plan

• Enhance Streaming Content and Accessibility: Continue to expand and integrate offerings on Disney+ to include a wider range of content, attracting broader demographics.
• Leverage Seasonal Strengths: Strategically plan releases and promotions around peak viewership seasons to maximize earnings.
• Invest in Future Growth: Pursue forward-looking projects like Disneyland Forward and enhanced ESPN streaming services to keep the brand relevant and competitive.

Blind Spots

• International Market Variability: The challenges in international markets, such as subscriber losses due to pricing and market dynamics, could undermine overall growth and may require tailored strategies per region.
• Backlash against “Woke” Culture: The challenges in domestic markets for Disney pushing its “woke” culture has caused widespread backlash against the company. Roughly 30% of Disney’s customer base has been offended by the company pushing its own lifestyle values onto children and those who visit its parks. Customer boycotts and subscriber losses could undermine overall growth.

Disney (DIS) Technical Analysis

Volume: The trading volume spiked to 55.08 million shares, considerably higher than the previous session. This spike, combined with the price increase, typically indicates strong buying interest.

RSI (Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More): The RSI is at 53.91, which is neither overbought nor oversold. This level suggests moderate momentum without clear indications of a trend reversal or continuation yet.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: Currently at 0.000, suggesting that the stock might be in an oversold condition in the very short term, potentially signaling a buying opportunity if other indicators align.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV line is trending upward, showing that volume on up days has been dominant, a positive signal for bullish continuation.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator stands at 191,712, indicating buying pressure as it measures the accumulation and distribution levels of the stock.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX): With an ADX of 23.64, the trend strength is considered weak to moderate. This suggests that while there is a trend, it’s not particularly strong, and traders should watch for potential changes.

In summary, Disney’s stock shows a moderately positive outlook based on the technical analysis, with signs of bullish momentum in the short term. However, the presence below the 200-day moving average advises caution for long-term investors. Future price movements should be monitored closely, especially any changes in volume and RSI for signs of trend reversal or continuation. Remember, past performance is not an indication of future results. Always consider conducting your own research.

FAQs about The Walt Disney Company’s Second Quarter 2024 Financial Results

What was notable about Disney’s financial results in the second quarter of 2024?

Disney reported a 30% increase in adjusted earnings per share, with significant contributions from the Experiences segment and streaming services, which reached profitability.

How does Disney plan to expand its content by the end of the year?

Disney+ recently integrated Hulu and plans to add ESPN content by the end of the year. Upcoming theatrical releases include “Kingdom of the Planet of the Apes,” “Moana 2,” and “Avatar 3.”

What are Disney’s strategic investments for future growth?

Disney is making strategic investments in theme parks and new experiences, which are expected to drive future growth. This includes projects like Disneyland Forward and enhanced ESPN streaming services.

What challenges is Disney facing in its expansion?

Disney faces challenges in international markets due to subscriber losses and market dynamics. Domestically, there is a backlash against Disney’s “woke” culture, which has caused significant customer boycotts.

What is Disney’s strategy for the streaming market?

Disney’s strategy focuses on integrating streaming with traditional content delivery, enhancing streaming content and accessibility, and leveraging seasonal strengths to maximize earnings.

Book Recommendations

1. “The Disney Way” by Bill Capodagli and Lynn Jackson – Insights into Disney’s successful business strategies and their application in various business contexts.
2. “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment” by Michael D. Smith and Rahul Telang – This book discusses the impact of digital transformation on the entertainment industry, relevant to Disney’s streaming ventures.
3. “Theme Park Design & The Art of Themed Entertainment” by David Younger – Offers a deep dive into the intricacies of theme park design, reflecting on Disney’s expansion efforts.