Disney’s Bob Iger: The company has turned a corner - stock shooting higher

Samantha Delouya, CNN | 2/7/2024, 3:38 p.m.
Disney has had a rough couple of years after CEO Bob Iger returned from a brief retirement. But the media …
Crowds fill Main Street USA in front of Cinderella Castle at the Magic Kingdom in Lake Buena Vista, Florida, in 2021. Mandatory Credit: Joe Burbank/Orlando Sentinel/Tribune News Service/Getty Images

Disney has had a rough couple of years after CEO Bob Iger returned from a brief retirement. But the media veteran said Disney is finally on the path toward success again.

The company surprised investors by announcing it would grow earnings per share by a whopping 20% this year, easily beating Wall Street analysts’ estimates.

“Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences,” Iger said in a statement.

In addition to its sunny full-year forecast, Disney reported a beat on the bottom line with earnings-per-share of $1.04 for the first quarter compared to Wall Street’s estimate of $0.99, according to FactSet.

However, Disney reported revenues of $23.5 billion for the quarter – nearly in line with revenue from the same quarter last year and missing Wall Street’s expectations for the first quarter.

Disney’s stock shot up 7% in after-hours trading.

Meanwhile, Disney continues to lose money in its streaming service business, though it has cut those losses compared to last year. Operating losses for Disney’s direct-to-consumer streaming products, which include Disney+, Hulu, ESPN+ and Hotstar, a streaming platform in India, narrowed to $216 million from nearly $1.1 billion last year.

Disney has never turned a profit in the division since launching Disney+ in 2019, though the company estimates that its streaming business will exit the red by the end of this year.

Partnership with ‘Fortnite’-maker

Disney also announced a major push into video games Wednesday. The entertainment giant said it would invest $1.5 billion to acquire an equity stake in Epic Games, the maker of the popular video game “Fortnite.”

As part of the partnership, Disney and Epic Games will collaborate on a “games and entertainment universe” using Disney’s stories and characters.

“This represents probably our biggest foray into the game space ever, which I think is not only timely but an important step when you look at the demographic trends and you look at where Gen Alpha and Gen Z and even Millennials are spending their time in media. it’s pretty dramatic in terms of the amount of time spent in games,” Disney CEO Bob Iger said in an interview with CNBC on Wednesday.

Disney’s foray into the video gaming space comes as competitor Netflix also ramps up their expansion into video games.

In December, Netflix launched three mobile-friendly games from Grand Theft Auto, one of the best selling video game franchises ever. In Netflix’s most recent quarterly earnings report, the company said its GTA offering was in the top mobile game downloads for several weeks.