Why Walt Disney Co. Shares Fell 5% Today
Walt Disney (NYSE: DIS) shares traded lower on Wednesday, following the release of third-quarter results and the announcement of a new push into streaming-video services. The multi-year contract with Netflix (NASDAQ: NFLX) for first-window rights to new Disney movies will be allowed to expire at the end of 2018. Disney shares spent most of the trading session roughly 5% below Tuesday's closing price.
The first-quarter report was a mixed bag. Earnings of $1.58 per share came in just above Wall Street's expectations, while the $14.2 billion revenue haul landed just short of analyst projections. Sales were flat year over year, earnings declined by 5%, and free cash flows jumped 33% higher. Great results in the parks and resorts segment were undermined by high programming costs and slow ad sales at sports network ESPN.
But that wasn't the driving force behind Wednesday's falling share price. Disney is investing another $1.8 billion in streaming video company BAMtech, on top of an earlier $1 billion investment in the video platform that was created by Major League Baseball 17 years ago. Investors seem skeptical about BAMtech's chances of earning back that large purchase price and might have preferred Disney to nurture its Netflix partnership, instead.
Source: Fool.com