Disney stock rally on streaming, dividend suspension

Walt Disney stock price soared almost 3.5% after beating revenue and earnings for the fourth quarter as streaming business helped to lower the 61% year over year drop in parks businesses.

The shares of the entertainment company have been under pressure over the past three quarters due to a massive blow to its parks business amid social distancing policies.

The company says their park’s business would take a longer time for complete recovery to pre-pandemic levels. Disney stock is currently trading around $135, down 4% year to date.

DIS The Walt Disney Company daily Stock Chart

Streaming and Media Networks Businesses are Bright Spots

Although its parks and studio businesses have generated a huge year over year decline in revenues, the media networks and streaming businesses are helping in offsetting the negative impact.

Its media business has generated $7.21 billion in fourth-quarter revenue, representing a growth of 11% from the past year period.

The direct-to-consumer and international business segment reported a 41% revenue increase from the past year period.

“The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+, we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year,”

CEO said.

Disney stock could face short-term headwinds

The massive growth in coronavirus infections throughout Europe and the United States has raised concerns over the short-term fundamentals of its already struggling parks businesses.

European countries have imposed new social distancing restrictions while the United States is also likely to introduce some sorts of restrictions to stop the virus spread.

Joe Biden’s advisor has recently stated that the country needs to go into lockdowns for four to six weeks to reduce the pace of virus infections.

However, Disney stock still appears like a great pick for long-term investors in the analyst’s view.

Siraj Sarwar - Lead Analyst
@tradethedayfx
Siraj Sarwar has been performing analysis on the stock market, equity research and general business consultation. He regularly contributes articles on economics, commodities, and equities to the world's leading websites, including Trade the Day, SeekingAlpha, TheStreet, and MSN.
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