07 August 2024
If you are covering Disney’s latest financial results, please find below a comment from Ben Barringer, technology and media analyst at Quilter Cheviot:
“Disney’s results have helped to pour fuel onto the fire when it comes to sentiment around a slowdown in the US. The Parks business, which accounts for over 50% of Disney’s profits, underperformed expectations as a result of weak consumer spending. Coupled with other travel companies recognising poor growth, it is clear people are scaling back their spend when it comes to tourism and recreation. Now, some of this is due to the Disneyland Paris struggling due to the Olympics being in town, as well as China going through its own economic problems, but the guide is not a positive one and thus we should expect further struggles through the rest of the year.
“Disney is offsetting some of this weakness through other departments. According to some, cinema blockbusters are back with a vengeance, and Disney has definitely seen this with the likes of Deadpool & Wolverine and Inside Out 2 producing stellar returns. How sustainable this will be is immensely uncertain, though, and it may be Disney has to rely on individual movie success stories more going forward. The entertainment giant, however, is getting better results out of Disney+ and ESPN, while it continues to cut costs out of the business to cushion the blow of the Parks business.
“Disney remains in turnaround mode, however, and this is likely to take time to play out. For as long as US consumer sentiment is weak, Disney is likely to struggle, and as such there are better, less complicated companies available for investors who want exposure to long-term entertainment themes, such as Netflix and Meta.”
