Disney Is Still an Awful Stock

By Douglas A. McIntyre Published Aug 8, 6:40AM EDT

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Walt Disney Co. (NYSE: DIS | DIS Price Prediction) trumpeted a turnaround as its streaming unit made money for the first time.
But the entertainment giant also showed it cannot fire on all cylinders.
Also: Dividend legends to hold forever.

Walt Disney Co. (NYSE: DIS) trumpeted a turnaround as its streaming unit made money for the first time. However, another part of the company–its parks unit–warned that business had slowed. The problem may be part of a large one. Consumer spending has started to decline in the United States. The trend, separately, has also caused worry about a recession. Disney proved it cannot fire on all cylinders.

The market saw the problem with Disney’s earnings picture. After the announcement, the stock dropped about 4.5%. The stock is down 19% in the past two years, while the S&P 500 has risen 25% in the same period. If raider Nelson Peltz had not taken a position and pressed for a Disney board seat and changes at the company, Disney’s stock price could be worse.

Disney’s quarterly revenue increased 4% to $23.2 billion. The company posted net income of $2.6 billion, compared to a year-ago loss of $460 million. While streaming figures improved, the operating profit was tiny. Revenue for the Direct to Consumer unit rose 15% to $6.4 billion, Operating income was $47 million, compared to a loss of $512 million last year.

Disney’s streaming challenge remains that there are too many streaming services, and Netflix and Amazon dominate the sector. Virtually every other large media company, from Warner Bros. Discovery to Paramount, has a streaming business. Apple does as well with its Apple+ service. Apple has an almost infinite amount of money to support its product, which separates it from the rest of the industry. It also has a target market of almost 2 billion people who own Apple hardware, particularly iPhones.

Disney said it has a theme park challenge. It also cannot say it has a bright future in streaming.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.