The Walt Disney Company reported better-than-expected earnings per share on Thursday, but that didn’t stop its stock price from taking an after-hours nosedive.
That’s because the entertainment giant reported slower-than-expected growth for its Disney Plus streaming service. The service now has 103.6 million paid subscribers, versus a consensus estimate of 109 million cited by CNBC.
Disney shares were down more than 4% in pre-market trading on Friday.
The hit underscores the extent to which Disney—a diverse conglomerate with theme parks, TV networks, movie studios, and a vast consumer products division—is now wholly reliant on one metric. “Nothing else seems to matter,” analysts MoffettNathanson said in a research note Friday. “Previous [key performance indicators] that would swing the stock in years past like ESPN-affiliate fees, domestic-park profitability or global box office are accidental details in a market that is laser focused on Disney’s direct-to-consumer pivot.”
With its disappointing numbers, Disney joins rival Netflix, which last month reported significantly slowed subscriber growth in the first quarter. The service added 4 million compared to an expected 6 million subscribers. Both companies are coming off a year in which people around the world were sheltering in place due to COVID-19 restrictions, but as those continue to lift, more people may decide to cut down on the number of streaming services they subscribe to.
Disney reported earnings per share of 79¢ for its second fiscal quarter, far higher than the 27¢ analysts were expecting. But revenue was slightly lower than projections: $15.61 billion versus $15.87 billion.