The shares of Walt Disney Co (NYSE:DIS) are trading lower today despite reporting quarterly earnings that beat the expectation of Wall Street analysts.
The stock price of the entertainment and media conglomerate was down nearly 3% to $89.63 per share at the time of this writing around 1:44 in the afternoon in New York. In fact, the stock declined to as low as $86.25 per share earlier today.
Over the past 52 weeks, Walt Disney’s stock price dropped from its highest trading price of $122.08 per share to its current trading price. The company lost Walt more than 15% of stock value year-to-date.
Reason behind the bearish sentiment on Walt Disney shares
The decline in the stock price of Walt Disney today showed that investors overlooked at the company’s record earnings of $1.63 per share for the first quarter compared with the $1.45 per share consensus estimate. Its revenue rose 14% to $15.24 billion.
Investors seemed more focus on the weakening performance of Walt Disney’s ESPN, its sports network and biggest profit contributor. They are concerned about ESPN’s subscriber losses, which continued in the first quarter.
The company’s cable networks business unit reported a 5% decline in operating income due to a decline as ESPN and lower equity income from A&E.
Walt Disney CEO addresses concern on ESPN
Walt Disney Chairman and CEO Bob Iger addressed investors’ concern during the company’s earnings call. According to him, they noted an increase in ESPN’s subscribers after the quarter. “We believe the predictions many have made [about the declining subscribers] are dire than they should be,” he said.
Mr. Iger emphasized, “Sports is too popular and it’s not just at ESPN. Look how the Super Bowl did, as a for instance. I realize it’s an ultimate event.”
“The notion that either the expanded basic bundle is experiencing its demise or that ESPN is cratering in any way from a sub perspective is just ridiculous,” said Mr. Iger.
He added that live sports are among the highest-rated programs across television and ESPN has incredible set of license agreements with all major sports.
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