Investing

Thursday Premarket: Disney's Disaster, Robinhood Now Open 24 Hours a Day

Premarket action on Thursday had the three major U.S. indexes trading mixed. The Dow Jones industrials were down 0.16%, while the S&P 500 was up 0.05% and the Nasdaq 0.10% higher.

Before markets open on Thursday, the Bureau of Labor Statistics will release its producer price index (PPI) report for April. Economists expect PPI to have risen by 0.3% in the month, compared to a month-over-month decline of 0.5% in March. If the economists are right, the disinflation we saw last month has disappeared.

After the Walt Disney Co. (NYSE: DIS) reported its fiscal second-quarter results Wednesday night, the stock took a beating that continued into Thursday morning. Shares were down about 5.6% in premarket trading. primarily due to the fact the Disney CEO does not appear to have a plan to stop the bleeding. Unless you count more of the same old, same old as a plan.

CEO Robert Iger looked at the numbers, saw that the media business profit was down 42% and that parks and cruises profit was up 23%, and declared a new vision to downplay media and focus on theme parks and cruise ships. High costs for cable sports combined with lower ad revenue due to fleeing subscribers reduced revenue in Disney’s linear networks segment by 7% year over year and lowered profit by 35%.

The loss in Disney’s direct-to-consumer business (that’s streaming to the rest of us) was reduced by 26% to $659 million for the quarter. On Disney’s conference call, Iger said:

I’m very optimistic about our direct-to-consumer business longer term. Combined, our brands, franchises, and robust library are a significant differentiator in this space, and the meteoric subscriber growth we’ve seen since our launch three years ago only further reinforces that. As I think about our path forward in streaming, we have a number of clear opportunities to further position our DTC business for success.

At the end of the first quarter, Hulu had a 21.2% share of the U.S. market, and Disney+ had a share of 6.4%. Netflix’s share was 44.2%. Hulu increased its share by less than 1% year over year, and Disney+ saw its share decline by about 0.3%. Netflix’s share dropped by 5.6% year over year.

Unless Iger can get more subscribers to pay more for Disney’s streaming services, betting the company on streaming is probably folly. That leaves parks and cruises. Domestic revenue was up 14%, while international revenue more than doubled. Profit rose by 10% in the domestic business and grew from a loss of $268 million in the year-ago quarter to $156 million.

Robinhood Markets Inc. (NASDAQ: HOOD) beat estimates on both the top and bottom lines when it reported earnings on Wednesday. But the news lifting the stock in Thursday’s premarket was the company’s introduction of 24-hour trading on a bag of selected stocks beginning next week. The 24-hour market will be open from 8:00 p.m. ET Sunday through 8:00 p.m. ET Friday, and stocks available initially include Tesla, Amazon and Apple.

Investors’ enthusiasm for Robinhood stock may cool a bit later Thursday morning, though. In its filing with the U.S. Securities and Exchange Commission, Robinhood revealed that the SEC and the Financial Industry Regulatory Authority (FINRA) are investigating several of the company’s practices and its compliance with reporting requirements.

Here is a look at how the markets fared on Wednesday.

Seven of 11 market sectors closed higher Wednesday. Communications services (1.69%) and technology (1.22%) posted the day’s largest gains. Energy (−1.15%) and financials (−0.58%) had the day’s worst losses. The Dow closed down 0.09%, the S&P 500 up 0.45% and the Nasdaq up 1.04% on Wednesday.

Two-year Treasuries dropped 11 basis points to end Wednesday at 3.90%, and 10-year notes also fell by 10 basis points to close at 3.43%. In Thursday’s premarket, two-year notes were trading at around 3.88% and 10-year notes at about 3.39%.

Tuesday’s trading volume continued a streak of below-average volume. New York Stock Exchange winners outpaced losers by 1,707 to 1,264, while Nasdaq advancers led decliners by more than 5 to 4.

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