Shares of Webtoon Entertainment (WBTN +3.73%) plunged 25% on Thursday after the digital storytelling platform's third-quarter results and forward guidance fell short of investors' expectations.
Image source: Getty Images.
Webtoon hopes a partnership with Disney will reaccelerate growth
Webtoon's revenue rose by 8.7% year over year to $378 million, fueled by new storytelling formats and successful adaptations of popular intellectual property.
On Sept. 15, Webtoon struck a deal with The Walt Disney Company (DIS +2.09%) to make over 35,000 comics from the entertainment giant's beloved brands -- including Marvel, Star Wars, and Pixar -- available via a single digital subscription.
"These milestones mark a powerful next step, creating a strong foundation as we remain focused on becoming the global destination for comics of all kinds," Webtoon CEO Junkoo Kim said in a press release.
NASDAQ: WBTN
Key Data Points
Webtoon is hoping the collaboration with Disney will help to stem a decline in its user base. The online comics platform lost 14.5 million active users compared to the third quarter of 2024.
Webtoon's profitability also deteriorated. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell to $5.1 million, down from $28.9 million in the year-ago quarter.
Management offered a tepid near-term sales outlook
Investors should brace for further declines in the fourth quarter. Webtoon expects its Q4 revenue to decrease by 2.3% to 5.1% on a constant currency basis to between $330 million and $340 million.
