Shares of Disney (NYSE:DIS) jumped in after-hours trading after the company reported earnings for its third quarter of Fiscal Year 2023. Earnings per share came in at $1.03, which beat analysts’ consensus estimate of $0.96 per share. Regarding subscribers, Disney+ saw its user base fall to 146.1 million, missing estimates of 154.8 million. ESPN and Hulu subscribers came in flat at 25.2 million and 48.3 million, respectively. Both also missed expectations. However, Disney also announced that it will be cracking down on password sharing in 2024 and raising prices starting in October in an attempt to make streaming more profitable.
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Sales increased by 3.9% year-over-year, with revenue hitting $22.33 billion. This missed analysts’ expectations by $200 million. Domestic Disney+ experienced a rise in the average monthly revenue per subscriber, moving from $7.14 to $7.31, attributed to increased advertising revenue. Internationally, excluding Disney+ Hotstar, the metric grew from $5.93 to $6.01, driven by improved retail pricing and favorable foreign exchange rates, despite a larger proportion of wholesale subscribers.
Conversely, ESPN+ witnessed a decline from $5.64 to $5.45, linked to reduced advertising revenue and an uptick in multi-product subscriptions. Hulu’s standalone SVOD reported growth from $11.73 to $12.39, benefiting from enhanced advertising revenue. Yet, the combined Hulu Live TV + SVOD saw a marginal decrease from $92.32 to $91.80 due to a shift in subscriber mix, although it was somewhat offset by higher advertising revenue.
Overall, Wall Street has a consensus price target of $115.11 on DIS stock, implying 31.52% upside potential, as indicated by the graphic above.
