Disney stock launches 10% higher on earnings beat, Abu Dhabi theme park

Disney stock rallies more than 10% on earnings beat.
Adjusted EPS reached $1.45, a 20% consensus beat.
Disney says it will partner with a local operator for its seventh theme park.
Disney+ subscribers increased by more than 1 million in the quarter.

Clay Webster FXStreet

Disney (DIS) stock is leading the Dow Jones Industrial Average (DJIA) higher on Wednesday. The entertainment conglomerate released a blowout quarterly result before the open and announced plans for a new theme park in Abu Dhabi, United Arab Emirates.

The broader market is mixed with the NASDAQ Composite down slightly in the late morning trade, but the Dow Jones is leading the pack, up 0.4%. Treasury Secretary Scott Bessent says he will hold the first set of trade negotiations with China this coming weekend at a meeting in Switzerland, which has prompted renewed optimism among Wall Street's elite.

There is still a bit of apprehension ahead of the Federal Reserve's (Fed) FOMC decision slated for 2:00 pm EST, although the central bank is expected to keep interest rates unchanged in a range between 4.25% and 4.50% as Chair Jerome Powell wants to wait until the Trump administration's tariff policy carries through into economic indicators.

Disney stock earnings

In the fiscal second quarter, which ended in March, Disney earned $1.45 or 24 cents per share, ahead of the Wall Street consensus. That amounted to an unexpected 20% beat on the bottom line. Revenue of $23.6 billion grew 7% YoY and arrived nearly half a billion above the general forecast.

The overall Entertainment unit saw operating income surge $500 million from a year earlier to $1.3 billion. The Experiences unit that houses its theme parks saw operating income add $200 million YoY to $2.5 billion in the quarter. The Sports unit, however, saw operating income fall nearly 12% YoY to $687 million.

ESPN+ subscribers fell 3% YoY to 24.1 million, Hulu subscribers rose 9% YoY to 54.7 million, and Disney+ subscribers rose by 1.4 million QoQ to 126 million.

Disney's direct-to-consumer segment saw a major pickup with operating income climbing 615% YoY to $336 million.

Disney said it had repurchased $1 billion worth of shares in the quarter and would buy another $2 billion the rest of the year. For the full fiscal year, Disney raised its guidance from $5.44 in adjusted earnings per share (EPS) to $5.75.

Disney executives said they plan to coordinate with local partner Miral to build a new waterfront resort on Abu Dhabi's Yas Island. This island already contains the SeaWorld and Warner Bros. World entertainment parks. Besides what will be its seventh theme park worldwide, Disney said it plans on investing $30 billion in its theme parks in California and Florida.

Disney stock forecast

Disney stock blasted through its 200-day Simple Moving Average (SMA) near $100 and now appears to be using it as support. Bulls will expect DIS stock to make a run at the $107 level that has acted as support in the past or possibly a further run at the $118 resistance level.

However, bears will note that the Relative Strength Index (RSI) has already reached overbought conditions, and any negative market sentiment could make this an operable level for taking profits off the table.

DIS daily stock chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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