The Walt Disney Co. earned Wall Street praise for the early momentum of its Disney+ streaming service, with some analysts raising their stock price targets. The stock was down in early Wednesday trading though. Details:
"Disney+ leaps over high bar, bolstering confidence in strategic pivot," said the title of one analyst's report.
"Much anticipated Disney+ subscriber sign-ups exceeded our 25 million year-end estimate at 26.5 million, growing to 28.6 million by February," he wrote. "Direct-to-consumer performance was the standout in terms of both subscriber additions and financial performance." "We believed Disney+ subs less than 25 million would drive stock down, greater than 30 million would drive stock up," the analyst wrote in a report. "26.5 million is squarely in the 'fairly priced' comfort zone. The 28.6 million update as of yesterday was probably more important: while the sub adds pace has significantly slowed, churn has not driven a decline ." He estimated Disney+ could end the company's fiscal year with 40 million subscribers.
But Nathanson also suggested that the early momentum could mean higher costs, saying "this growth does not come cheap, as Disney’s direct-to-consumer services lost $1.1 billion in the quarter."
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