Disney is down 5.42% ahead of Monday’s opening bell after the company reported mixed quarterly results and saying it will stop streaming its new releases on Netflix beginning in 2019.
The entertainment giant reported revenue of $US14.24 billion, missing the Wall Street consensus of $US14.42 billion. Earnings of $US1.58 per share outpaced the Wall Street estimate of $US1.55.
Additionally, Disney announced a direct-to-consumer video streaming service for both ESPN and Disney movies.
The ESPN service is set for early 2018, while the Disney movie service is expected in late 2019.
John Janedis, an analyst at Jefferies, says the slide in Disney’s stock is a near-term reaction to Tuesday’s news.
“While the stock may respond negatively in the near term, the potential value creation over the next 5 years is likely worth well above the implied ~$US2-$US3 billion in Disney’s EV from the Netflix deal,” Janedis said in a note to clients.
Steven Cahall at RBC agrees, saying the move is a “rare and impressive pivot” from a such a large company.
Disney is down 2.9% this year including the post-earnings drop.
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