Despite its lack of profitability, Disney (DIS:NYE) CEO Robert Iger is hopeful about the future of the company’s streaming business. Iger ascribed the success of Disney+ to the quality of its content at a recent conference but acknowledged the need for the corporation to cut expenses, recruit more customers, and focus on its pricing strategy in order to achieve profitability.
Direct-to-Consumer reported a Q1 operating loss of $1.1 billion, with increased content, production, and technological expenditures for Disney+ being a prominent component. Disney’s current reorganization plan, which seeks to produce $5.5 billion in company-wide cost savings and $3 billion in content-related cost savings over the next four years, is expected to help Disney+ become profitable by the end of Fiscal 2024. In addition, Disney expects to reintroduce its dividend by year’s end.
Despite the current lack of profitability in its streaming business, Disney stock is up 10% year-to-date and has a Strong Buy consensus rating on Stock Target Advisor, with 17 Buy and 2 Hold analyst recommendations. The $126.39 price target implies a 33.39% upside potential for Disney stock.
Despite the fact that Disney’s streaming business is not yet profitable, the company’s ambitions for cost reduction and profitability, together with the quality of its content, provide an optimistic outlook for the entertainment giant.