Disney's Stock Price Just Plunged. Is Now the Time to Invest?

Core Viewpoint - Walt Disney reported fiscal second-quarter earnings that disappointed investors, leading to a stock price drop of up to 10% shortly after the release [1] Group 1: Financial Performance - Disney's revenue growth was 1% year-over-year, which was below expectations, but the Experiences segment grew by 10% year-over-year, driven by strong performance in parks and cruise lines [2] - The entertainment segment saw a revenue decline of 5% year-over-year, primarily due to lower ad revenue from linear TV and a lack of major film releases [3] - Adjusted earnings per share increased by 30% year-over-year, and free cash flow improved by 21%, indicating strong profitability despite stagnant revenue growth [4] Group 2: Future Prospects - Disney is in the early stages of a $60 billion investment in its experiences business, which could drive long-term demand growth for its parks [5] - The streaming services Disney+ and Hulu achieved profitability and added 6 million members in the latest quarter, suggesting potential for faster earnings growth [5] - Disney announced a $3 billion buyback plan for fiscal 2024, with $1 billion already spent in the recent quarter, indicating a commitment to returning capital to shareholders [6] Group 3: Challenges and Considerations - There are concerns regarding succession planning as CEO Bob Iger's tenure is uncertain, and advertising revenue pressures in the linear TV business could impact growth [6] - The future of in-person movie releases remains uncertain, which poses risks to a significant revenue source for Disney [6] Group 4: Investment Opportunity - Despite disappointing guidance and revenue growth, the potential profitability of the streaming business and ongoing investments in parks may present a buying opportunity for long-term investors [7]