After the US stock market on November 12, Eastern Time, Disney released its financial report for the fourth quarter of fiscal year 2020.
Editor’s note: This article is from the WeChat public account “US Stock Research Society” (ID: meigush).
After the US stock market on November 12, Eastern time, Disney released its financial report for the fourth quarter of fiscal year 2020. After the earnings report was released, Disney’s stock price rose nearly 6% after the market. As of the publication of the US Stock Research Agency, Disney reported $139.98 per share, with a total market value of $244.8 billion.
Since the beginning of this year, Disney has suffered a heavy blow to offline parks and has suffered a loss for the first time in 40 years. This is a big shock for Disney. In the field of offline theme parks, Disney is the “defending king”, but in the growing streaming media track, Disney can be said to be still in the second echelon, but in the competition with Netflix, Disney still has to face the difficulties and challenges Quite a lot, how should we look at the latest financial report handed over by Disney?
The revenue of parks has increased month-on-month, “eye-catching”, but subsequent operations still face the impact of the epidemic
This quarter’s quarter-on-quarter increase in park revenue has become one of the biggest highlights in the fourth quarter’s financial report. Disney’s park business has recovered to a certain extent this quarter. According to the latest financial report data, the theme park, experience and consumer goods business revenue this quarter was 2.6 billion U.S. dollars, a 61% decline; compared with the previous fiscal quarter’s 983 million U.S. dollars, an increase of 164% from the previous quarter.
As can be seen from the data and the above figure, although Disney’s offline theme park revenue is still showing a downward trend year-on-year, the trend of month-on-month increase is very significant, indicating that Disney’s offline theme parks are gradually resuming business.
The actual situation is also true. Among them, Disneyland in Shanghai announced the restart in early May;Hong Kong Disneyland opened on July 15 and is open 5 days a week. After opening for a period of time, the Disneyland in Paris and Tokyo closed again due to the repeated epidemics.
Although offline parks in some areas have not yet been opened, the parks that have been opened also contributed part of Disney’s revenue this quarter. From the perspective of total quarterly revenue, Disney’s total revenue for the quarter was US$14.7 billion, compared with US$19.1 billion in the same period of the previous year, a year-on-year decrease of 23%; compared with US$11.8 billion in the previous fiscal quarter, a month-on-month increase of 24.6 %.
In this quarter, Disneyland’s revenue accounted for 17.68% of total revenue. Last quarter’s revenue from parks accounted for 8.33% of total revenue. In the first quarter of this year, this figure was 31.99%. It can be seen that the proportion of park revenue in total revenue has increased from the previous quarter, but the situation has not improved compared with the situation before the epidemic. Park revenue once occupied the majority of Disney revenue, but it was partially offset by the development of streaming media during the epidemic. The loss of income in the park during the period.
In the future, whether Disney’s offline park business can recover to the level of 2019 and before, the US Stock Research Agency expressed doubts. One is that the entertainment needs of consumers may be dispersed in other ways during this time. Universal Studios, Carnival Entertainment, yachts, and even casinos may all become substitutes for consumer entertainment needs. Even if all offline theme parks are normally opened in the future, people’s desire to consume Disney’s interest may have been reduced.
Secondly, even before the epidemic, the offline Disney parks in Hong Kong and Paris were already going downhill. According to data, the Hong Kong Disney theme park has been at a loss in recent years, while the offline theme park in Paris has been less crowded since its completion.
It can be said that before the spread of the health incident, Disney’s offline theme parks had already encountered some bottlenecks, and the epidemic was even worse for Disney’s theme parks.
The rapid increase in the number of paying users has become a “bright spot” in the financial report, betting that Disney+ faces a battle with the giants
After the release of Disney’s fourth-quarter earnings report, the stock rose in after-hours trading, and the stock price rose by nearly 6%. Morgan Stanley also gave an “overweight” rating and raised its 12-month target price to 160 dollars. The US Stock Research Agency believes that all of this is due to the fact that Disney’s streaming media revenue and TV network revenue in this quarter were higher than market expectations.
According to the financial report data, thisQuarterly streaming media business revenue was 4.85 billion US dollars, an increase of 41% year-on-year. The number of Disney+ users in the fourth quarter was 73.7 million. The paid users of ESPN+ and Hulu increased to 10.3 million and 36.6 million, respectively, and the total number of users has exceeded 120 million.
Previously, Disney’s management had predicted that Disney+ could have 90 million subscribers in 2024. According to the growth rate of paying users this quarter, it is quite possible to achieve this goal. And the number of paying users of Disney’s three streaming media platforms has exceeded 120 million, and the gap between Netflix, which has 195 million paying users, is gradually narrowing.
Looking back now, Disney rushed to launch Disney+ in November last year to be a very correct choice. It was hit by the new crown epidemic within 4 months of launching, and it unexpectedly got development opportunities. Considering the subscription fee, the subscription fee of Disney+$6.99/month is relatively low among many streaming media in the United States. In addition, the launch of blockbusters such as “Hamilton” and “Mulan” has increased the enthusiasm of users to subscribe.
However, as Disney’s first attempt to convert offline movies to online playback of “Mulan”, the feedback from the market was not good. The online broadcast price of “Mulan” is US$29.9, which is still relatively high compared to other streaming platforms. It shows that in the context of a sharp decline in profits due to the epidemic, Disney also wants to rely on the release of “Mulan” to “make a fortune”.
However, the film was released in the market where Disney+ did not go live, and earned US$66.8 million in box office revenue, most of which came from mainland China (US$42 million). According to statistics, the box office of “Mulan” in China is only 278 million yuan, which is much lower than the previous expectations of Disney management.
Although the revenue of “Mulan” is not as good as expected, Disney has turned its streaming media business into a key development business segment, especially in the 2020 fiscal year when the uncertainty increases. Part of it is due to the sudden drop in revenue from the park; and the other part is due to Netflix’s rapid development in the streaming media track.
At present, in the streaming media track, Netflix still occupies a stable first echelon, while Disney, HULU, AMAZON Prime, etc. belong to the second echelon. Netflix still has a large advantage in the number of paying users, and its cash flow is better than Disney. The US Stock Research Agency believes that if it wants to fight Netflix on the streaming media battlefield, Disney’s loss may lead to a financial crisis.
Disney is still at a loss this quarter. According to financial report data, the loss for the quarter was US$710 million, which was a 167.4% year-on-year decline compared with a profit of US$1.054 billion in the same period last year; and a loss of 47.2 in the previous fiscal quarter. Compared with US$100 million, the month-on-month contraction was 84.95%. And Netflix showed in its latest financial report that its net profit in the third quarter was $790 million.
Although the loss situation has improved significantly from the previous month, the current Disney streaming media business is still far away from the time it has carried the profit flag of Disney. Disney+ has not yet achieved profitability this quarter, and when will it achieve profitability in the future? Unknown.
In addition, offline theme parks still require high operating costs even if they have not yet opened. Therefore, the US Stock Research Agency believes that Disney’s cash flow will be tight in the next few quarters. If its streaming media business cannot grow rapidly, it will be the largest profit. , Disney’s profit margins will continue to be under pressure in the future, and this may also lead to a disadvantage in the battle with Netflix. The US Stock Research Agency will also continue to pay attention to the future development of Disney.