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Disney Shares Soar After Strong Q4 Earnings and Optimistic Guidance

Disney’s (DIS) fiscal fourth-quarter results unveiled a notable shift in its direct-to-consumer (DTC) business, which includes Disney+, Hulu, and ESPN+.

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Posting an operating income of $321 million, Disney swung from a $387 million loss in the previous year, reflecting a significant turnaround for the entertainment giant. This marks Disney’s second consecutive quarter of streaming profitability—a critical development as traditional pay-TV continues to decline.

Following a series of subscription price hikes, Disney expects its DTC operating income to climb to $875 million by fiscal 2025. The momentum in streaming has not only supported the company’s revenue growth but also helped hedge against declines in linear networks. Disney’s strategic focus on profitability through streaming comes as the company navigates a consumer landscape increasingly oriented towards digital content.
Quarterly Performance and Investor Response
In fiscal Q4, Disney reported adjusted earnings per share of $1.14, surpassing Wall Street estimates of $1.10 and representing a 39% increase from the previous year. Revenue also climbed by 6% year-over-year to reach $22.57 billion. These results sent Disney’s stock up 6.7% in Thursday afternoon trading, marking its highest level in over six months.

Disney’s theme parks and experiences division contributed $8.24 billion in revenue, edging out expectations. Despite a slight downturn in overseas parks due to challenges like typhoons and the Paris Olympics, the division is expected to rebound with the upcoming launch of Disney’s new cruise ship, Disney Treasure, and an uptick in domestic operating income.

Long-Term Growth Outlook and Strategic Initiatives
Looking ahead, Disney has projected high single-digit EPS growth for fiscal 2025, with double-digit growth anticipated in both 2026 and 2027. As Disney eyes a $3 billion stock repurchase target, CEO Bob Iger’s leadership has placed an emphasis on shareholder value, backed by planned dividend hikes aligned with profitability.

Disney also aims to strengthen its lineup with blockbuster releases, including Moana 2 and Mufasa: The Lion King, potentially replicating the successful summer releases of Inside Out 2 and Deadpool & Wolverine. As the company gears up for the future, the planned succession of Iger by early 2026 remains a focal point, with a widened pool of candidates led by board member James Gorman.

Conclusion
With robust Q4 earnings, profitable streaming operations, and a clear growth roadmap, Disney’s stock has recaptured investor confidence. This latest chapter positions Disney not just as an entertainment leader but as a streamlined, future-focused company ready to adapt and expand in a dynamic industry landscape.


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