Well apparently, the nightmare wasn’t a dream. U.S. markets rallied on Tuesday, and legit said “sike” yesterday as the market melt’s on earnings that fall into the “mediocre at best” column. 

(Source: Giphy)

In result, all three major indexes cried wolf as the Nasdaq led the slump dipping -1.05%, followed by the Dow closing at -0.60%, and the S&P 500 dropping -0.77%. The Russell 2000, (because we can’t forget the “get rich quick” small caps) took a massive dump on degenerates as it ended the day -1.41%. 

(Source: Barrons) 

With that said, while Big Tech continues to put the market in its feels this week, Apple is trading like it’s gone full on “cyclical” as it jumped +1.25%. So there’s something to ponder on as we start today’s mystery box trading session.

However, when it comes to this issue, it might do investors some justice to sprinkle a little bit of that fairy dust in their portfolio’s as Disney has officially got its magic back following its impressive earnings showing yesterday. 

(Source: IBD)

For starters, after experiencing a streak of quarterly revenue misses the past year, Disney decided to finally post a win in its streaming business… for the first time ever. This had the company pulling in a nice operating income of $47 million on a whopping $6.5 billion in revenue during its fiscal third quarter. 

(Source: Giphy) 

Again, this is huge considering just a year ago, Disney's DTC business was hemorrhaging money faster than Johnny Depp's career—losing a staggering $512 million in the same quarter. However, fast forward to the present and Disney decided to pull its own fairy tale as it not only posted revenue of $22.08 billion, beating estimates by 0.28% - but, it’s revenue gained 1.23% year - over year.

(Source: Hollywood Reporter)

Now in the broader financial landscape, Disney also reported adjusted earnings of $1.39 per share, beating analysts' expectations of $1.19 and significantly higher than the $1.03 from the previous year. Of course, the reason for Disney’s impressive numbers comes at the hand of its loyal fanbase. 

When it came to Disney+, the company ended the quarter with 118.3 million subscribers, a slight bump from 117.6 million last year. Hulu (Disney’s other streaming arm) also saw growth, reaching 46.7 million subscribers. Not a bad day at the office, if I do say so myself. 

(Source: Giphy)

On the other hand, despite the revenue jumps and the increased subscriber counts, Disney’s average revenue per user (ARPU) took a bit of a hit, dropping 3% to $7.74 for domestic Disney+ users. (Which makes sense, considering Disney has announced it will inevitably piss people off by raising prices). 

(Source: Variety) 

Looking ahead, Disney is definitely feeling more optimistic than Olaf in summer. When it comes to guidance, CEO Bob Iger is confident about the trajectory, stating, “We continue to feel optimistic about our trajectory, with multiple building blocks for improving margins over the coming years.” - Thanks for your input Bob, now back to our regularly scheduled programming… 

(Source: Giphy) 

These building blocks that are up Disney’s sleeve, again, include raising prices across its streaming services this October. But while people love paying more for the same content (sarcasm obvi), Iger made it worth mentioning that ““Every time we've taken a price increase, we've had only modest churn from that.” So, apparently, it’s a justified decision to make more money at the cost of losing consumers. Capitalism baby…

(Source: Giphy) 

Now with that said, even with the basking glow of Disney’s newfound streaming profitability, let’s not forget about the rest of the Magic Kingdom, which is facing its own set of challenges. It’s definitely not all fairy tales and happy endings (get your mind out of the gutter) as Disney's park business saw a 6% dip in operating income, and linear networks are still struggling like the line for Space Mountain on a holiday weekend. The company also acknowledged that demand moderation could continue over the next few quarters.

(Source: Reuters) 

But in true Disney fashion, the company is committed to navigating these waters with a $60 billion investment plan over the next 10 years. Because as we all know, money fixes all our problems. 

Now keep in mind, regardless of the earnings beat and the positive financials, Disney’s stock did take a slump of -2.54% on the day following the numbers. Because as we mentioned in yesterday’s Lyft article Wall Street Logic 101, follows zero logic sometimes. 

(Source: Yahoo Finance) 

Because apparently even with a major overhaul of good news, one small blimp can take the whole Hindenburg down. But of course, some may look at this and see $$$ signs, as the stock is trading at an extremely cheap discount from its March 2021 highs (down roughly -57%).

(Source: Giphy)

So regardless if you feel the “Buy the Dip” itch, or not this Thursday, it’s clear that as Disney continues to evolve in the streaming wars, they aren’t just relying on nostalgic magic, Iger apparently has a play to put Disney back on the map. 

After all, in Disney’s world, dreams can, and do come true…as long as you’re willing to pay an arm and a leg (and possibly your firstborn) for ‘em. 

Stocks.News holds positions in Apple and Disney as mentioned in the article.