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Disney Earnings Results Fall Short, Stock Punished

Disney (DIS) - ★★★★ - Ranked #23 in Q2 2024 Large Cap Equity Rankings

Shares of Walt Disney Co. (DIS) are in freefall today, down over 8% and on pace for the largest single-day percentage decline since May 11, 2023. The plunge comes after the entertainment conglomerate reported lackluster fiscal second-quarter results.

For the quarter ended March 31, Disney posted revenue of $22.08 billion, a meager 1% year-over-year increase that narrowly missed Wall Street's consensus estimate of $22.11 billion. While adjusted earnings per share of $1.21 exceeded expectations of $1.09, the topline miss appears to be heavily weighing on investor sentiment.

A closer look reveals weakness in Disney's core entertainment business. Revenue from this segment, which includes Disney's media networks and studio entertainment operations, fell 5% from the prior year to $9.8 billion. This decline offset gains in the company's other segments - parks & experiences revenue climbed 10% to $8.4 billion, while sports revenue grew 2% to $4.3 billion.

The mixed results underscore the challenges Disney faces as it pivots its focus to streaming video while contending with stressed consumer spending. With recession fears looming, investors may be growing concerned about the company's ability to fuel robust growth across its legacy TV and movie businesses as well as Disney+.

Today's sell off has erased some of the gains that Disney has seen year to date. However, the stock is still up 18% year to date. The market reaction suggests investors were hoping for a stronger performance and more optimistic outlook from the media titan.

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