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The pandemic probably led to many years of growth being compressed in months for Disney+. The company reported a total of 73.7 million subscribers for the service. Additionally, it was able to experiment with new ways to release movies through its streaming platform which will be more profitable in the long-term. Finally, the vaccine news is a light at the end of the tunnel. The park' business is likely to see massive pent-up demand, and the entertainment division should also see a return to 2019 levels at some point next year.
Inside the Numbers
This dichotomy is evident in Disney's Q3 results. Overall, the company lost $0.20 per share which was better than expectations of $0.71 per share. Revenue also was higher than expected at $14.7 billion vs expectations of $14.2 billion.
Disney's legacy businesses suffered but still did better than expected. However, streaming's growth continues to impress as Disney+ had 73.7 million subs, Hulu had 36 million, and ESPN+ had 10.3 million subs. This makes Disney the second-largest steaming company with 120 million subs with Netflix
In terms of its parks division, locations in Paris and California are closed, while other parks have limited capacity. The company estimates a $2.4 billion loss due to the pandemic for the parks division in the quarter.
Stock Price Outlook
Disney's stock has steadily trended higher following its earnings report. The company has exposure to the "stay at home" economy and the "reopening" economy which makes it an apt investment for this period of time as the world returns to normal.
The company should also reinstate its dividend in the coming quarters as it chose to forgo dividends in lieu of investing in content for Disney+. The stock is appealing for longer-term investors and short-term traders. Disney is emerging from an almost six-year consolidation period which should lead to sustained gains. On a short-term basis, it's showing relative strength, breaking out to new highs, and dips should be bought as the market are more focused on the improving intermediate-term picture due to the vaccine.