Walt Disney Co (NYSE:DIS) reports first-quarter earnings amid turbulent times. DIS stock is sliding lower ahead of earnings.
Bob Iger led media and entertainment giant Walt Disney Co (NYSE:DIS) will report its fiscal 2018 first-quarter earnings today after the closing bell. The market scenario right ahead of earnings looks grim with the broader markets yesterday seeing their biggest declines in recent times. DIS stock is down nearly 5 % in the last 5 days giving up all the gains in the year-to-date. On top of it, the news of Comcast (NASDAQ:CMCSA) coming with a bid which could exceed the house of mouse's bid for Twenty First Century Fox (NASDAQ:FOX) assets could overshadow the earnings results. There will be a focus on the existing ESPN woes and cord cutting even though investors are willing to look at Disney stock prospects keeping its future streaming ambitions in mind.
Now coming to the expectations from Disney's Q1 earnings, the mood is not so upbeat as many are of the view that the entertainment giant could again miss the estimates. The Wall Street consensus for the media conglomerate is non-GAAP earnings of $1.61 per share on revenue of $15.45 billion. This implies a slim revenue growth of 4.5% on a year-on-year basis and EPS increment of just 6 cents from the year-ago EPS of $1.55, up nearly 4%. Disney is betting heavily on its streaming ambitions to resolve its ESPN woes and offset the cord cutting phenomenon which plagues its cable business. Investors would also have high hopes from the recently released Star Wars movie to boost the studio division. However, whether that will be enough or not is still a big question. The Parks and Resort segment is likely to be the bright spot again, whose fiscal 2017 revenues were up 8% YoY to $18.42 billion. Having said this, that will not be enough for Disney as its other segments need to show some strength in the earnings release. The earnings whisper number of $1.65 per share does suggest an earnings beat, yet, the company needs more than earnings beat to restore investor confidence.
DIS stock is testing its key support levels of 100-day and 200-day SMA, which have acted as a strong support level over the last few months. Amid the recent selloffs, the breach of these key support levels could have a detrimental effect on Disney stock. Despite the bearish atmosphere in the market, options traders are betting heavily on a strong earnings reaction from DIS stock with February $121 call seeing the largest increase in open interest ahead of earnings.
Will Snap Inc's (NYSE:SNAP) latest earnings lift investor sentiment around the stock?
Snap Inc (NYSE:SNAP), the parent company of popular messaging app Snapchat, is scheduled to release its fiscal fourth-quarter earnings today after the market close. The Evan Spiegel co-founded company has a lot at stake on Tuesday as another poor show at the earnings could result in further declines, with the stock having a rough year till now having almost reduced by half since its all-time high near its debut. However, SNAP stock surprisingly managed to close in the green when the whole market was sliding down due to the big selloff yesterday. The Facebook's copycat onslaught has taken a toll on the snapchat platform's growth with its user base growth falling short of expectations. Investors would be keenly looking at the earnings release to show some signs that Snap can hold its own fort in the battle with Facebook (NASDAQ:FB).
Analysts expect Snap Inc to report a Non-GAAP loss of 16 cents per share, just 1 cent better than what the company had reported in the same quarter last year. However, it is not the EPS which many investors will be worried about but more than expected losses can detrimental as seen in the last quarter. Snap being a high growth company, the revenue growth and the user growth is what matters more as it plans to take on the competition. Going by the analysts' estimate, Snap Inc might not live up to the expectations on this front. As Wall Street estimate calls for the Venice, California based company to report revenues of $252.95 million, a YoY growth of 52.67%. This has been the lowest revenue growth for the company since it went public. The user growth metric is quite important for SNAP stock's fortune and it cannot afford to miss on this mark like last time. Analysts expect it to add 6 million users in Q4. Some analysts are very bearish ahead of earnings with their price target at almost half of yesterday's close. Any major miss in the earnings could result in the stock falling to single digits as suggested by some analysts.
There have been reports of some major redesign in the Snapchat app going ahead but it is still yet to reach the end users. Reports also suggest that the changes rolled out few test users have not got good reviews and hence it has been held back. In the earnings call, commentary on this aspect will also be closely monitored as the company struggles to combat Facebook which has copied many of the platform's features and has been successful doing that. To conclude, this latest earnings release could hold the answer to SNAP's fortunes in the year 2018.
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