Disney Stock Dives After Earnings. Here's Why
Walt Disney stock is down Tuesday after the company came up short of revenue expectations for its fiscal second quarter. Here's what you need to know.
 
 
Walt Disney (DIS) stock is down nearly 10% midday Tuesday after the media and entertainment giant's revenue came up short of Wall Street's expectations for its fiscal second quarter.
In the three months ended March 30, Disney's revenue increased 1.2% year-over-year to $22.08 billion. Earnings per share (EPS) were up 30.1% to $1.21 from the year-ago period.
Disney's results were given a boost by strong numbers from Disney+ and Hulu, which each posted a profit for the first time ever in the March quarter. Additionally, Disney+ Core subscribers were up 6% compared to the end of 2023 to 117.6 million. ESPN, on the other hand, saw a 9% decline in operating income and a 2% drop in paid subscribers.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
 
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The top- and bottom-line results were mixed compared with analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $22.11 billion and EPS of $1.10.
As a result of its impressive earnings results in the first six months of its fiscal year, Disney raised its full-year EPS outlook, now calling for 25% year-over-year growth vs its previous guidance of 20% growth.
"Our strong performance in Q2, with adjusted EPS up 30% compared to the prior year, demonstrates we are delivering on our strategic priorities and building for the future," Disney CEO Bob Iger said in a statement. "Our results were driven in large part by our Experiences segment as well as our streaming business. Importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4."
Is Disney stock a buy, sell or hold?
Despite Disney's mixed results, analysts are still overwhelmingly bullish on the blue chip stock. According to S&P Global Market Intelligence, analysts' average target price for DIS stock is $126.48, representing implied upside of more than 20% to current levels. Additionally, the consensus recommendation is Buy.
BofA Securities is one of the firms with a Buy rating on Disney stock. It also has a $145 price target, representing implied upside of nearly 40% to current levels.
"DIS reported a solid fiscal second quarter with revenue essentially inline and operating income modestly ahead of our expectations," BofA analyst Jessica Reif Ehrlich said in a May 7 note. She adds that near-term catalysts for the Dow Jones stock include an inflection in profitability for its direct-to-consumer division and additional updates on the company's strategic priorities.
Today's pullback makes for an attractive buy-the-dip setup, says Don Montanaro, president of Firstrade. "Smart investors might want to buy Disney when it dips like it has today, and then patiently hold as the future dynamism of streaming revenues emerges over time," Montanaro says. "Imagine ESPN as a personalized streaming service including integrated social media interactions with star athletes plus easy gambling at viewers" fingertips. That's a differentiated, modern experience." 
The executive adds that investors who share this long-term outlook and have  plenty of patience should adopt a buy-and-hold strategy with Disney stock. 
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
- 
 Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap. 
- 
 Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t) Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history. 
- 
 Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap. 
- 
 Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong Buy Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong BuyWall Street is highly bullish on these three high-quality stocks. 
- 
 Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs) Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation. 
- 
 This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had Holes This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts. 
- 
 US-China Trade Hopes Send Stocks to New Highs: Stock Market Today US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club. 
- 
 A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and Around A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested. 
- 
 I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth Transfer I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally. 
- 
 To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's Steps To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth.