Shares in Disney fell as low as $158.34 on Nov. 11, down 9.2%, or $14.11 each. The stock was priced at $163.10 at 1:33 p.m., down 6.5% or $11.35 each.
Disney said Wednesday night that it had added 2.1 million new subscribers to its Disney Plus service in fiscal Q4, far below analysts consensus estimates for an additional 4 million customers in the period ended Sept. 30.
On a conference call with analysts, Disney CEO Bob Chapek said Disney Plus subscriber additions would be meaningfully higher in the second half of fiscal 2022 after new market launches and new original content in the pipeline take hold.
“In total, we are nearly doubling the amount of original content from our marquee brands, Disney, Marvel, Pixar, Star Wars, and National Geographic coming to Disney Plus in fiscal year 2022, with the majority of our highly anticipated titles arriving July through September,” Chapek said on the conference call. He added that the goal is to more than double the 60 countries in which Disney Plus is currently available to more than 160 nations by fiscal 2023.
But not all analysts were convinced that would be enough to meet Disney‘s targets.
“Who is this consumer who wasn't interested in [Disney Plus] when it had the library and some original Marvel, Star Wars content, but will become interested when there is 2x the amount of the same brands of original content?” Bernstein media analyst Todd Juenger wrote in a note to clients. “We have yet to meet the child who says no to one scoop of ice cream, but yes to two.”
Barclays Group media analyst Kannan Venkateshwar added that while Disney said it would meet its Disney Plus subscriber guidance targets of between 230 million and 260 million paid customers by the end of 2024, that may be difficult to achieve.
In order to reach the midpoint of that goal, Disney Plus would have to maintain its current pace of annual global subscriber additions of about 44 million customers. But that won‘t be easy. Venkateshwar noted that Netflix is only adding about 27 million paid customers per year on a content budget that is $3 billion to $4 billion higher than that of Disney Plus.
“These goals seem aspirational to us given trends thus far this year,” Venkateshwar wrote. He added that Disney Plus had several new shows this year — WandaVision, Loki, The Mandalorian and The Falcon and the Winter Soldier — and has others in the immediate pipeline, including the much anticipated Book of Boba Fett, slated for a Dec. 29 release.
“Despite this, new market launches, more sports on services like Star+ (which is counted as Disney Plus from a sub perspective) and a recent price promotion, growth has been much slower vs required trend to get to guidance,” Venkateshwar wrote. “Therefore, it is not clear why the company is confident that growth will accelerate just on the back of more content.”
Still other analysts saw more content and more markets as enough to reach those goals. In a research note Evercore ISI Group media analyst Vijay Jayant estimated Disney Plus would add 48 million paid customers in fiscal 2022.
Morningstar senior equity analyst Neil Macker noted that Disney Plus added 44.1 million new customers in fiscal 2021, far outpacing Netflix’s 18.4 million additions over the same period. And he added that Disney Plus is only available in 60 countries, many of which were only added in the past year.
“Even with the slower-than-expected subscriber growth this quarter, we still project robust long-term growth for the service,” Macker wrote in a research note.
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