Disney Stock Plunges 12% After Reporting Q4 Earnings Miss, High Cost of User Acquisition

Disney shares took another significant dip Wednesday, suffering a nearly 12% loss triggered by worse-than-expected earnings and ballooning expenses in its fourth-quarter earnings report. With that, The Walt Disney Co. stock was down around 40% for 2022.

The high cost of user acquisition was a major factor: Disney says it added 14.6 million subscribers during the quarter, and has eclipsed Netflix’s 223 million tally with a total of more than 235 million. But revenue-per-user shook out at $3.91, falling short of analyst expectations at $4.24, meaning the cost of acquiring and retaining each user was on the rise.

The conglomerate on Tuesday reported a profit of 30 cents a share on revenue of $20.15 billion, while streaming subscriptions hit 164.2 million, during the quarter. But there are concerns about whether the industry Goliath can gain enough subscribers to subsidize the cost of streaming content.

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Disney, which has been in a back-and-forth battle with Netflix for the title of world’s biggest streaming platform, was expected to post a profit of 54 cents per share for the three months ending in September, a 46% increase from last year, on revenues of $21.247 billion.

The parks, experience and consumer products division revenue also came in low, at $7.43 billion against expectations of $7.59 billion. The company also warned that Disney+ subscriber growth will fall in the first quarter, with a content spend approaching $30 billion.

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