Disney’s Stock (NYSE:DIS) Rally’s on Earnings Beat

Shareholders of the Walt Disney Company have endured a difficult start to 2025, with the Disney stock price (NYSE: DIS) declining 16.98% year-to-date; yet this morning's pre-market has given bulls something to smile about, with a 5.89% gain on earnings. The company has been dealing with a myriad of challenges; from macroeconomic uncertainties, shifting consumer preferences, and strategic pivots across its business segments.

With the next set of earnings fresh at hand, markets will be scrutinizing its ability to balance streaming growth, theme park resilience, and studio performance against rising tariff risks and recessionary pressures.

The operational challenges are reflected in the volatility that has persisted through the year; with DIS up more than 16% from the April lows, yet continuing to trade 19% below February's high. Undulations that resemble one of their theme park rides has been the tone for the year, but what comes next?

Disney's Earnings

Disney came in impressively with $1.45 in EPS (against expectations of $1.21), and with revenue of $23.6 billion also a beat on the street's $23.1billion consensus.

The detailed report will focus on the three key areas of DTC, Experiences, and Studio.

The company’s Direct-to-Consumer (DTC) segment, anchored by Disney+ and Hulu, has seen mixed results. While Disney+ Core and Hulu subscriptions reached 174 million in late 2024, recent quarters have seen modest subscriber declines, and ARPU growth has slowed to 2.3% YoY. Content launches like Deadpool & Wolverine are expected to help offset churn, but competition from Netflix and Amazon Prime remains fierce.

The Experiences division, including theme parks and cruise lines, faces its own challenges. U.S. park attendance declined 4.7% in April 2025, attributed to elevated ticket prices and competition from Universal Studios. Disney’s cruise expansion, highlighted by the Disney Treasure launch, aims to mitigate these pressures, though operational costs for new ships remain high.

Studio Entertainment has been a mixed bag: while Inside Out 2 and Deadpool & Wolverine have set records, the live-action Snow White remake underperformed, leading to the cancellation of future adaptations like Tangled. Political risks loom as well, with proposed tariffs on foreign film productions threatening to raise studio costs by up to 20%.

Analysts remain cautiously optimistic, with a consensus “Strong Buy” rating (20 “Strong Buy,” 2 “Moderate Buy,” 7 “Hold”) and a 12-month price target range of $79 to $147. The mean target, $128.48, implies nearly 39% upside from current levels, though the divergence in price targets reflects uncertainty around discretionary spending cuts.

• UBS: Maintained a Buy rating but lowered the price target to $105, citing near-term theme park softness and streaming saturation.
• Loop Capital: Reduced its target to $120 but highlighted Disney’s “unmatched IP portfolio” as a long-term differentiator.
• Morgan Stanley: Upgraded DIS to Overweight, predicting a rebound in international park attendance and DTC profitability.

Disney currently trades at 17.19x forward earnings, a discount to its five-year average of 22x, potentially offering value for long-term investors. However, the stock’s 19.71% annualised volatility signals that near-term turbulence is likely to persist until political and economic uncertainties subside.

On the cost side, Disney’s recent 6% workforce reduction in its ABC News and Disney Entertainment Networks divisions is expected to save $1.2 billion annually, but has drawn criticism over potential impacts on content quality and morale.

Disney also announced a 6% reduction in its ABC News and Disney Entertainment Networks workforce in April 2025, aiming to save $1.2 billion annually. While this aligns with CEO Bob Iger’s efficiency goals, it has drawn criticism over potential impacts on content quality and employee morale. The layoffs follow a broader trend in media, with Warner Bros. Discovery and Paramount implementing similar cuts.

With the stock trading at 17.19x forward earnings, a discount to its 5-year average of 22x, long-term investors may find value, but near-term volatility is likely until macroeconomic and political uncertainties ease.