The Disney+ logo on a television screen in Paris on December 26, 2019.
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disney Shares fell about 9% on Thursday after the company reported subscriber declines on Disney+ during its most recent quarter.
The company Book profit and revenue Disney+ reported a decline of 4 million subscribers in a time period consistent with Wall Street expectations. That decline was offset by higher prices, narrowing his $400 million operating loss for the streaming division in the second quarter of the fiscal year.
Still, Wall Street expects Disney+ subscribers to grow by more than 1 million, according to The Street Account, and the unexpected drop in subscribers has horrified Wall Street.
The company’s stock was trading at about $92 a share on Thursday. The company’s shares were up more than 16% since the start of the year as of Wednesday’s close.
The drop would have wiped out the company’s market value by about $15 billion.
Disney shares fell after Thursday’s second-quarter earnings report for the fiscal year.
Disney will face headwinds from cut advertising budgets and fierce streaming competition from the US. Netflix New ad inventory and continued economic uncertainty are having an impact, according to a memo from Paul Verna, principal analyst at research firm Insider Intelligence.
“Disney managed to stem the loss of streaming revenue, but it did so primarily by raising prices, a strategy that is not sustainable in the long term,” Verna wrote. “Disney plans to raise prices further later this year, but the room for further price increases will soon run out.”
Analysts at SVB Moffett Nathanson responded to the report by lowering their price target by $3 to $127, but maintained their Outperform rating. The company expects total subscriptions to remain broadly flat in the third quarter of the fiscal year and increase in the fourth quarter of the fiscal year.
Macquarie Senior Media Technology Analyst Tim Nollen also maintained the Outperform rating, saying Disney “has the essential assets to make a successful transition to streaming, but it’s a multi-pronged effort.” It pointed out.
“Disney is pursuing cost-cutting and operational efficiencies at a time of structural and cyclical deterioration in its linear television business,” Nolen said in a memo.
Disney CEO Bob Iger is overseeing the company’s massive restructuring, which includes about 7,000 job cuts in total, and is expected to be completed by the summer.
The company announced Wednesday that it will be adding Hulu content to its streaming app Disney+, while the ad-free streaming service will raise prices later this year.
Share of other streaming services warner bros discovery and Paramount They also fell about 4% each on Thursday. netflix The stock price remained almost unchanged.