The Walt Disney Company DIS is expanding the Star Wars universe with the launch of Star Wars: Ahsoka on Aug 23, exclusively on Disney+. The series will follow the former Jedi Knight Ahsoka Tano as she investigates an emerging threat to a vulnerable galaxy, after the fall of the Empire.
Disney+ has been a game-changer for Disney, thanks to its strong content portfolio. The service offers nearly 700 movies and 11,700 episodes of television shows from brands such as Disney, Pixar, Marvel, Star Wars and National Geographic and Disney+ originals.
Disney+, as of Apr 1, 2023, had 157.8 million paid subscribers compared with 161.8 million as of Dec 31, 2022. Disney+ core subscribers grew modestly, with more than 600,000 net additions. Core international subscribers increased by close to $1 million.
Domestic core subscribers declined slightly due to price increases. However, domestic average revenues per user increased 20% sequentially, reflecting strong subscription revenue growth. The company also plans to increase the price of its ad-free tier by the end of this year.
Following the footsteps of Netflix NFLX, Disney started offering an ad-supported tier on Dec 8, 2022. It has added more than 1,000 advertisers over the past year and now has 5,000 advertisers across its streaming platforms. Disney now plans to launch an ad tier on Disney+ in Europe by the end of 2023.
The Walt Disney Company Price and Consensus
The Walt Disney Company price-consensus-chart | The Walt Disney Company Quote
What to Expect From Disney in the Rest of 2023
Disney shares have outperformed the Zacks Media Conglomerates industry on a year-to-date basis. However, it has underperformed its closest peer, Netflix. While Disney shares have gained 6.5%, the industry has returned 9.2% and Netflix shares have surged 35.6% over the same timeframe.
A strong lineup of movies, including The Little Mermaid, Indiana Jones and the Dial of Destiny, The Boogeyman, Elemental and Haunted Mansion, bodes well for the Media and Entertainment Distribution segment.
Revival in Parks, Experiences and Products businesses is encouraging. Theme Park business is likely to gain from strong demand across both domestic and international parks.
Disney still expects fiscal 2023 revenues and operating income to grow in the high single-digit percentage range. It expects weakness in Disney+’s domestic subscriber base to continue in the third quarter but anticipates core subscriber growth to rebound in the fourth quarter.
Zacks Rank & Stocks to Consider
Disney currently has a Zacks Rank #3 (Hold).
Reservoir Media RSVR and Pearson PSO are a couple of better-ranked stocks in the same industry. While Reservoir Media sports a Zacks Rank #1 (Strong Buy), Pearson carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long term earnings growth rate for Reservoir and Pearson is pegged at 10% and 10.59%, respectively.
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