Shares of Walt Disney (DIS 1.26%) sank on Wednesday after the entertainment giant reported a profit shortfall and warned of slowing growth in the year ahead. As of 3:30 p.m. ET today, Disney's stock price was down more than 12%.
Disney's revenue rose 9% year over year to $20.1 billion in its fiscal fourth quarter, ended Oct.1, as more people returned to its theme parks and subscribed to its streaming services. Wall Street, however, was expecting the company to generate more than $21.2 billion in sales.
Disney+ subscriber growth was one of the few bright spots in the media titan's earnings release. It added 12.1 million Disney+ subscribers and a total of 14.6 million subscriptions across all its streaming offerings, which include Hulu and ESPN+.
Disney+ ended the quarter with 164.2 million subscribers, surpassing analysts' estimates of roughly 160.5 million.
Yet that subscriber growth came at a cost. Heavy spending on content, marketing, and technology resulted in an operating loss of nearly $1.5 billion for Disney's direct-to-consumer segment, which houses its streaming services. That was significantly larger than the $630 million operating loss the division reported in the year-ago period.
All told, Disney's adjusted earnings per share fell 19% to $0.30. That, too, was well below analysts' estimates, which had called for adjusted per-share profits of $0.55.
CEO Bob Chapek said streaming-related losses should moderate as Disney works to rein in costs, and as recently-announced price increases help to bolster profitability. But chief financial officer Christine McCarthy warned that Disney+ subscriber growth could also slow in the first quarter as the company laps difficult comparisons from the prior year.