Disney Stock Drops as Revenue Disappoints

Disney shares were down about 8% in early trading Thursday, as efforts to turn around a yearslong stock slump with growth in its streaming and experiences businesses failed to impress investors.

The entertainment giant reported roughly flat revenues of $22.46 billion in its fourth quarter that ended in late September, short of Wall Street analysts’ expectations. Companywide segment operating income fell 5% to $3.48 billion, driven by weakness in the television and movie businesses, while parks and streaming posted profit gains.

The company’s shares have been hovering between about $80 and $125 since early 2022 after reaching nearly $200 in 2021. Its stagnant stock price has been a long-running concern for shareholders and employees about Disney Chief Executive Bob Iger’s efforts to turn around the company since he returned in late 2022.

Despite consistent profit growth, investors remain worried about Disney’s ability to manage the transition from linear television to streaming and to execute on the multibillion-dollar investments it is making in theme parks and cruise ships. Disney’s “valuation gap versus the market has widened even as [earnings per share] has continued to outpace the market in recent years,” analysts at Bernstein wrote this week.

In a move to return more cash to investors, Disney said Thursday it would double share repurchases to $7 billion in the current fiscal year and increase its dividend by 50% to $1.50 per share.

The company also focused heavily on what it said were strong prospects for its streaming business. Iger said on a call with analysts that he sees Disney+ as not just a growing content platform, but as a way to use artificial intelligence to let people shop for products, engage with theme parks and cruise ships, play games, and produce and consume user-generated content based on Disney properties.

“The opportunity here is enormous in terms of increasing our engagement with Disney fans,” he said.

Total subscriptions to Disney+ and Hulu rose 12.4 million during the quarter to 195.7 million. About half of the increase came from a new deal offering Disney streaming apps to Charter’s cable customers. Most of the rest came from overseas.

The company said it expects profitability in its streaming business to grow to 10% in the current fiscal year from about 5% in fiscal 2025.