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Disney brings good and bad financial news that could impact Central Florida
ORANGE COUNTY, FL. – Disney stock can sometimes rise and fall as much as a roller coaster at the Magic Kingdom.
On Tuesday, the company’s shares took a hit after CEO Bob Iger announced a surprise profit in its streaming business but challenges at its theme parks.
Strong earnings were reported for the second quarter ending March 30. Revenues increased to $22.1 billion from $21.8 billion in the year-ago quarter. But shares fell even after announcing that the streaming business turned a profit for the first time.
The strong earnings report was overshadowed by warnings of upcoming difficulties. Disney also announced that it expected weaker results this quarter, which caused its share price to fall almost 10%.
Investors reacted nervously to the impending slowdown at Disney theme parks. National parks revenue increased 7% year-over-year, driven by rising average ticket prices at Walt Disney World and higher costs.
The company says demand at parks appears to be normalizing after the post-COVID crisis, but was still healthy.
For tourists who come here, this is the most magical place on earth, but for locals, Disney is a major employer that boosts the local economy.
Disney is Central Florida’s largest employer. Former Disney casting director and professor at UCF’s Rosen College of Hospitality Management, Dr. Duncan Dickson says we need to keep an eye on its quarterly earnings reports.
“If Disney has a hiccup, Central Florida could have a heart attack… There are so many businesses that rely on Disney locally,” Dickson said. “The smaller hotels on 1-92, the I-drive hotels, if Disney attendance drops, those will be the first to feel it.”
On the Q1 earnings call, Disney’s chief financial officer said, “While consumers continue to travel in record numbers and we are still seeing healthy demand, we are seeing some evidence of a global moderation in the post-COVID travel spike.” .
Some of the other highlights from the second-quarter earnings call include high hopes for several upcoming film releases, such as “Kingdom of the Planet of the Apes,” which hits theaters this Friday.
Additionally, Disney Plus will begin showing some live sports from ESPN this year.
The company also announced that it is cracking down on people sharing their Disney Plus passwords.
Combined, Disney’s three streaming services lost $18 million, still an improvement over the previous year’s $659 million.
Dickson says this is not the time to panic, but to understand the importance of the Mouse House to the local economy.
“If Disney employees’ hours are reduced, they might not get fired, but their hours might be reduced, which means they won’t be able to spend as much at Sam’s Club or Costco or whatever, so all those things they go hand in hand, and when you have 70,000 employees, that’s a huge monster to tame.”
Disney shares ended the day down 9.51%, at US$105.39 per share.
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