Disney Shares Sink Most In Seven Months As Soft Earnings, Film Costs Drag Outlook
Shares of Disney tumbled the most in seven months early in the U.S. cash session after the media company missed quarterly revenue expectations and warned that film-studio expenses will drag on the current quarter, particularly costs tied to major releases.
Disney posted uninspiring fourth-quarter revenues, flat at about $22.5 billion and below the Bloomberg consensus estimate of $22.8 billion. Adjusted EPS beat at $1.11 versus the $1.07 expected. The miss sent shares in New York down 8% in the cash session, the largest intraday decline since April 3. The company also warned about softening across its entertainment unit.
Covid lows…
Here's the snapshot of the fourth quarter earnings:
Revenue: $22.46B (-0.5% y/y, miss vs. $22.83B est.)
Adjusted EPS: $1.11 (beat vs. $1.07 est.)
Entertainment Segment:
Revenue $10.21B (-5.7% y/y)
Op. income $691M (-35% y/y, miss)
Sports Segment:
Revenue $3.98B (+1.7% y/y)
Op. income $911M (-1.9% y/y)
Experiences (Parks & Cruises) Segment:
Disney+ subs: 131.6M (+3% q/q, beat)
Domestic: 59.3M International: 72.4M
Hulu subs: 64.1M (+15% q/q, beat)
Average Revenue Per User
Disney+: $8.04 (up q/q, beat)
Hulu SVOD: $12.20 (slightly down)
Hulu Live TV: $100.02 (flat)
Disney's entertainment unit (streaming, film, and TV) faces several challenges:
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Streaming: Q1 operating income forecast at $375M, below what analysts hoped for.
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TV: Lower political ad spending will drag performance
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Major film releases: Marketing and distribution for Zootopia 2 and Avatar: Fire and Ash will reduce Q1 earnings by $400M
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Film releases: Marketing and distribution for ZoSports: Launch of full ESPN streaming helps, but timing of rights payments limits profit growth.otopia 2 and Avatar: Fire and Ash will reduce Q1 earnings by $400.
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Avatar opens December 19, giving Disney minimal revenue inside the quarter.
Disney expects double-digit earnings growth in fiscal 2026, with most of that growth expected to materialize in the second half.
2026 Outlook:
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Operating cash flow: $19B (well above $16.86B est.)
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Capex: $9B (vs. $7.88B est.)
Here is Goldman TMT specialist Peter Callahan's first take on Disney earnings:
DIS -6% in the pre (back to last weeks' levels)… stock had run a bit into print and the moving parts in qtr / guide underscore the debate around complexity relative to the "DD EPS" outlook that investors were debating into results (e.g. bottomline line strong, but moving parts on DTC and Parks) … conf call ongoing (started @ 830am) … notables from print / GIR first take
EBIT missed on opex and DIS' F1Q26 guidance for DTC SVOD EBIT of $375M missed GS/consensus of $514/$523M, which when combined with DIS' F2026 $24B cash content spending outlook, suggests that DIS may be investing more in DTC in F2026 than we expected.
Experiences EBIT missed and the F2025 10-K disclosures suggest to us that there was weakness in domestic theme parks with F2025 attendance -1% yoy (implies F4Q25 -4% y/y) and per capita spending +5% (implies F4Q25 +3% y/y). As expected, DIS guided to $120M of dry dock expenses in F2026 (incl. $60M in F1Q26) and $160M in preopening expenses in F2026 (incl. $90M in F1Q26). Although we're encouraged by the reiterated F2026 outlook for Experiences +HSD% y/y, it was below our elevated expectations.
DIS reiterated its DD% EPS growth guidance for F2026 (not including the benefit from the extra week) and for F2027 with all F2026 segment EBIT growth guidance also reiterated (Entertainment DD%, Experiences HSD%, Sports LSD%).
DIS: chart of Disney vs S&P5000 .. stock has been bouncing around / off the lows on a relative basis with bulls arguing the R/R is attractive from low-100s levels (vs bears argue too many moving parts in a complex macro backdrop)
Additional Wall Street reactions:
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Bloomberg Intelligence: Solid Q4 supports 19% FY2025 EPS growth, but guidance looks conservative; sees catalysts ahead, especially improved streaming margins.
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Citi (Buy, PT $145): Revenue "a bit light," but weakness is mostly from linear TV, the least important business — seen as encouraging.
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Seaport (Buy, PT $130): Revenue miss and outlook suggest content and marketing spend may exceed prior expectations.
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Vital Knowledge: Calls the report "lackluster" with sales shortfall and inline operating income; Q1 looks pressured, but FY26–27 EPS outlook is encouraging.
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KeyBanc: Says the quarter "appears negative," with soft DTC operating-income guidance and weakness in content raising concerns.
The question remains: how "woke" will Disney remain in the Trump era, where the Overton Window has clearly shifted center-right and parents are increasingly tired of globalist messaging embedded in children's shows and cartoon content?
Tyler Durden
Thu, 11/13/2025 – 11:10