Disney earnings: It’s all about streaming – Stock Market News

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The future remains bright overall but a lot of good news is already priced in judging by the company’s tech-like valuation.

The pandemic forced the company to shut its theme parks and pushed back the timing of its theatrical releases as cinemas closed down, devastating its profits and revenue.

Turning to the upcoming results, for the quarter that ended in March, the company is expected to report earnings per share of $0.28 on revenue of $15.89 billion.

While these numbers seem dismal, remember that they cover a period when Disney’s amusement parks and cinemas across the world were still closed down.

Beyond earnings, what will really drive the market reaction will be the guidance from the firm’s executives around subscriber growth in streaming over the coming quarters.

This ratio denotes the dollar amount someone would need to invest to receive back one dollar in annual earnings, so the higher it is, the more ‘expensive’ a stock is considered.

On the bright side, it has fallen substantially in recent months, as earnings expectations have been revised higher with parks and cinemas reopening.

But when so much optimism is baked into a stock, any setbacks or negative news can spark a deep correction as those rosy expectations are unwound.

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