The Walt Disney Company, which experienced a share price crash and seems to be preparing for a round of layoffs after missing earnings projections by more than $1 billion, with the Disney+ streaming service losing a staggering $1.5 billion, isn’t doing well. That represents a 40% bigger loss for the woke entertainment giant’s streaming service than experts had predicted. Go woke, go broke, right?
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Disney CEO Bob Chapek warned executives in a letter that was acquired by the Wall Street Journal that the company’s disappointing financial report probably meant that layoffs would have to take place.
A hiring freeze at the business and more restrictions on employee travel were among the additional cost-saving measures CEO Bob Chapek announced in the letter in addition to the potential layoffs of workers.
While the potential number of layoffs was not mentioned in Chapek’s letter, the memo did mention that Horacio Gutierrez, the company’s general counsel, and Christine McCarthy, the chief financial officer, will be working together to review Disney’s administrative spending in addition to its marketing and content spending.
During the company’s earnings call in November, CFO McCarthy discussed the changes in spending and stated that the company would be looking for both short-term and long-term opportunities to save money.
Chapek reportedly stated the following in the letter when discussing the future changes and cost-cutting measures. “I’m fully aware this will be a difficult process for many of you and your teams. We are going to have to make tough and uncomfortable decisions.”
In a statement about the results, CEO Chapek also stated that the streaming service will turn a profit by the end of the current fiscal year, adding:
“The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate. By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future.”
Following the earnings announcement and more than $1 billion earnings miss, Disney’s stock price suffered a severe decline, with Disney shares dropping by 7% on Tuesday afternoon, according to MarketWatch.
When compared to the S&P 500, which is down for the year but not as badly as Disney, the company is down significantly. Disney’s post-earnings call crash added to its share price issues for the year. In a report on the matter, MarketWatch noted, shares of Disney are down 35.5% this year, while the broader S&P 500 index…has dropped 20%.
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