Jason Moser, Senior Analyst at The Motley Fool, joined Wake Up With Cheddar to talk about the big takeaways from Disney's Q1 report, which showed the company nearing 130 million Disney+ subscribers as parks revenue ticks up.

Wake Up With Cheddar

Disney Shares Soar on Strong Earnings, Subscriber Numbers

let's bring in Jason Moser, senior analyst over at the motley fool to break down more of this for us. Jason, Good morning as always. So what do you make of this earnings report? I think a lot of people were expecting this sort of to be maybe the most sluggish of, of the reports for Disney for the rest of the year. But it seems like it's a surprise here. Yeah. Hey Baker, I, I think you're right. This was, this was a pleasant surprise. Of course, obviously, I mean you look at 2021, it wrapped up. Uh, Disney was the worst performer in the Dow 30 for the year. So, uh, you're kind of wondering where all the magic is? Well, it feels like maybe they have a couple of tricks still up their sleeve. It looks like, I think you're right on the subscriber side. Right. Disney plus the over the top offerings, right? All of their streaming offerings. That, that's what really, I think takes takes a front and center here for, for most. But, but to me what really stood out what was just so impressive in the park segment of this business just was on fire. I mean, when, when you look at revenue revenue almost doubles, right? Or essentially doubles in that segment and then operating income just goes through the roof essentially because, I mean, the operating income was in the red, uh, from, from a quarter a year ago. So, so clearly we're seeing people a little bit more comfortable getting out there. Uh, clearly we're seeing people a little bit more comfortable spending money and spending time at those parks and when you put that all together with what I think really is encouraging data on the streaming side. I think the markets reacting appropriately this morning. In the premarket our yes, so, okay, let's talk about parks here for just a moment because what I thought to be the most fascinating number besides the fact that parks are roaring back, international travelers have not returned yet and we forget that that makes it about 18-20% of the park revenue, especially in Florida. So given that we did Disney did incredibly well without international travel, does that give you sort of this very bullish forecast at least for the rest of the year as more pandemic related measures start to decrease here. Absolutely. I mean, I think we saw clearly very strong performance globally speaking. I mean they really did call out the north american parks. Um I think they said that everything was open for the entire quarter, which really which really helps the cause. But but to your point there just regarding traffic, I mean, they didn't know the call, they said per capita spending on domestic parks, that was up more than 40% versus fiscal quarter 2000 and 19. But the interesting part, their traffic was actually lower tenants levels are actually lower than 2000 and 19. So they're doing more with less, which I think is really encouraging. And a lot of that just comes from uh, integrations of certain software and new experiences within the parks to help manage the attendance in the experience better, write fast passes and whatnot. So they've done a lot of work here over the past couple of years, while we've been in a little bit of a state of flux here to make the in park experience better. And it looks like those investments are really starting to pay off. Let's take a look at the streaming part of this as well because clearly they're losing tons of money when it comes to streaming because their CFO said yesterday that the company is not at a point of steady expenses when it comes to Disney Plus, they also said that they're hoping to spend between about 800 million to a billion dollars just in terms of, of programming expenses for this. Given the fact that numbers, the subscriber numbers were good, but Disney was expecting subscriber numbers to be better at the second half of this year. Does this give you an indication that Disney will in fact be able to get to that 230 million to 260 million subscribers by 2020 for that Bob Peck is hoping for here, you know, if you had asked me a year ago. And I say this is a Disney plus subscriber, right. It's a popular offering in our household a year ago. I would have looked at this with a little bit more skepticism that target at 230 million. 260 million Disney Plus subscribers. That's a big number, Right? And you're talking about 130 million Disney Plus subs today. So if if you gain that out right, You're looking at essentially 20% growth annualized over the coming three years, right? The target is that 32-60 by the end of 2024. So now, given this quarter's performance, it starts to feel like it's a little bit more reasonable to believe they can get there in one of the reasons why, you know, right before bob Iger stepped down, he noted, and I think quite astutely that really Disney gets, they need more content for more people, Right? It's a wonderful offering, but but it does tilt younger, right? It tilts more towards the kids in your home. And so it was encouraging to hear Mr, Chadwick on Mccall said that they really are doubling down on investing in that general entertainment, bringing that into all of their services. So, you've got Disney Plus, you've got the hulu property, you've got FX all sorts of different ways for them distribute, to distribute all sorts of different content to many different audiences. And it feels like that really got their attention. They're gonna start doubling down on that across all of the services. And to me now, I can start seeing that 230 to 260 million goal as being a little bit more reasonable and I'm starting to believe they could do it. Yeah. And and bob Shaye, peck, even saying in an interview afterwards yesterday confirming the reports that Disney looking into the NFL sunday ticket package, which no doubt would also help boost subscribers as well. Jason Moser. Always good to have you here this morning. Senior analyst over at the motley Fool. Have a great rest of your day, Jason