Walt Disney (DIS 1.54%) CEO Bob Chapek had a lot say on Tuesday. He made a presentation at the Goldman Sachs Communacopia Conference, offering insight into how Disney has been faring since last month's third-quarter earnings call.
There was a lot to unpack, and one item has been widely cited as the reason the stock sank on Tuesday. Let's go over some of the more notable things that Chapek revealed during his 39-minute investor conference presentation.
Image source: Disney.
1. Disney+ subscriber growth is slowing
There's a lot of moving parts when it comes to Disney, but nothing seems to get the shares going quicker than guidance on its Disney+ streaming platform. The service has been a hit since launching in late 2019, and Disney has big plans for new content to hit the platform on Nov. 12 to celebrate the service turning two years old.
We saw the stock take a hit following its second-quarter results for the three months ending in March when it grew its Disney+ user base less than expected. We saw the stock bounce back in the third quarter after it had more net additions than analysts were modeling. Chapek mentioned on Tuesday that its global paid subs will increase by "low-single-digit millions" of subscribers. After audience growth of 12.4 million subscribers in the third quarter, it's a big letdown.
Chapek blames headwinds including COVID-19-related production delays on new content. He feels they will be short-lived. He also cautioned analysts and investors not to simply evenly divide the net additions required to hit Disney+ subscriber goals for 2024 by the number of quarters between now and then. There will be lumpiness along the way, and we saw that perfectly illustrated with the blowout fiscal third quarter sandwiched by the disappointing low single digits in the second and now fourth quarters.
2. Folks are coming back to the theme parks
There were plenty of reports in late August detailing how empty Disney World and to a lesser extent Disneyland were as the peak summer travel season came to an end. Chapek said on Tuesday that the tide had turned starting on Labor Day weekend. September has seen an uptick in visits, and naturally things will only heat up at Disney World as new rides and experiences greet guests come October as the resort celebrates turning 50 with an 18-month celebration across the four theme parks.
The pesky delta variant left a mark in the tourism market in August, but with COVID-19 case counts and hospitalizations in Florida finally showing signs of easing in September, guests appear to be coming back. Chapek noted on Tuesday that there hasn't been any major resistance from guests to a return to face covering requirements for the resort's indoor spaces.
3. While my Disney dividend check gently weeps
Disney was one of the many companies to suspend their payouts when the pandemic hit. It doesn't seem to be in a hurry to bring the distributions back anytime soon. Chapek said that the priority right now is funding Disney+ and other growth businesses.
After seeing Disney's credit rating slide last year, Chapek doesn't feel that the time is right to begin returning money to its shareholders through dividends or buybacks. His board of directors agrees with him. With Disney+ not expected to turn a profit until 2024 and its consumer-facing businesses still not out of the pandemic woods, Chapek doesn't see Disney becoming a dividend stock again until the "distant future."
