ORANGE COUNTY, Fla. – Disney shares can sometimes be as up and down as a roller coaster ride at Magic Kingdom.
On Tuesday, the company’s stocks took a hit after CEO Bob Iger announced a surprise profit in its streaming business, but challenges at the theme parks.
Strong earnings for its second quarter ending March 30 were reported. Revenues increased to $22.1 billion from $21.8 billion in the prior year quarter. But stocks fell even after it announced the streaming business turned a profit for the first time.
The strong earnings report was overshadowed by the warnings of bumps ahead. Disney also announced it expected weaker results in this quarter, which sent its stock price down nearly 10%.
Investors responded nervously to a coming slowdown at Disney theme parks. Revenue at the domestic parks was up 7% compared to the previous year, driven by higher average ticket prices at Walt Disney World and higher costs.
The company says demand at the parks seems to be normalizing after the post-COVID crush, but was still healthy.
For tourists who come here, this is the most magical place on earth, but for locals, Disney is a huge employer that drives the local economy.
Disney is Central Florida’s largest employer. Former Disney director of casting and Professor at UCF’s Rosen College of Hospitality Management, Dr. Duncan Dickson says we need to keep an eye on their quarterly earnings reports.
“If Disney has a hiccup, Central Florida can have a heart attack... There’s just so many businesses that are dependent on Disney locally,” Dickson said. “The smaller hotels on 1-92, the I-drive hotels, if Disney attendance shrinks, those are the first ones to feel it.”
At the first quarter earnings presentation call, Disney’s chief financial officer said, “While consumers continue to travel in record numbers and we are still seeing healthy demand, we are seeing some evidence of a global moderation from peak post-COVID travel.”
Some of the other highlights from the second-quarter earnings call include high hopes for several upcoming movie releases, like “Kingdom of the Planet of the Apes,” which hits theatres this Friday.
Also, Disney Plus will start showing some live sports from ESPN this year.
The company also announced they are cracking down on people who share their Disney Plus passwords.
Together, Disney’s three streaming services lost $18 million, still an improvement from $659 million a year earlier.
Dickson says it’s not time to panic but to understand how important the Mouse House is to the local economy.
“If Disney employees’ hours are cut, they may not be laid off but their hours may be cut, which means they are not able to spend as much at Sam’s Club or Costco or whatever so all of those things go hand in hand, and when you have 70 thousand employees that is a huge monster to tame.”
Disney stocks ended the day down 9.51% at $105.39 a share.
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