Disney revealed in its latest financial report that its streaming business, which directly targets consumers, achieved profitability for the first time, but it is expected to continue to lose money in the next quarter, causing the company's stock price to drop by nearly 10%

Disney's overall performance met market expectations, with a revenue of $22.1 billion in the second quarter and an adjusted annual profit growth expectation of 25%. CEO Bob Iger actively promotes business transformation to address the challenges of the decline in traditional television business.

Financial report overview

Disney achieved direct consumer oriented business profits in the second quarter of its financial year, including Disney+and Hulu, which incurred a loss of $587 million in the same period last year and recorded revenue of $47 million this year. However, the overall direct consumer business, including ESPN+, still incurred a loss of $18 million. In addition, the company expects that due to losses from the Indian brand Disney+Hotstar, the entertainment division's direct consumer business will experience losses next quarter.

Main business performance

Disney added over 6 million core Disney+subscribers in the second quarter, and its average revenue per user (ARPU) also increased due to price adjustments and crackdowns on password sharing practices. Disneyland's business also recorded growth, but ESPN's domestic operating revenue decreased by 9% compared to the same period last year.

Stocks and market reactions

Despite investors being more optimistic about the stock in recent months, Disney has recently won a high-profile proxy battle. However, after the release of its second quarter financial report, its stock price still fell nearly 10% on Tuesday due to weak expectations for the entertainment streaming business in the next quarter.

Financial Forecasting and Challenges

Although the adjusted annual profit growth forecast has increased from 20% to 25%, Disney still expects to achieve full streaming profitability in the fourth quarter of this year. However, after merging its Star India business with Reliance Industries, the company reported impairment expenses exceeding $2 billion, and Chief Financial Officer Hugh Johnston mentioned signs of a slowdown in global tourism demand at Disneyland.