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Disney Stock Slumps On Slowing Disney+ Subscriber Growth, Weak Q4 Earnings

Disappointing growth for its signature Disney+ streaming service, as well as weaker-than-expected fourth quarter earnings, has Disney stock trading in the red Thursday.

Walt Disney  (DIS) - Get Walt Disney Company Report shares slumped lower Thursday after the entertainment and media icon posted weaker-than-expected fourth quarter earnings and disappointing additions to its Disney+ streaming service.

Disney added 2.1 million new subscribers to its two-year old Disney+ over the three months ending on October 2, the group's fiscal fourth quarter, notably shy of the FactSet forecast of around 10.2 million. The gains put the Disney+ total at 118.1 million, compared to 213.6 million for Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report as of the end of September. 

The tally came alongside fourth quarter earnings of 37 cents per share, which missed Street forecasts by 15 cents, and softer-than-expected overall revenues of $18.53 billion. Theme Parks revenues rebounded from last year's COVID hit to $5.5 billion, while content licensing revenues rose 9% to $2 billion. 

"I want to reiterate that we remain focused on managing our (direct to consumer) business for the long term, not quarter to quarter, and we're confident we are on the right trajectory to achieve the guidance that we provided at last year's Investors Day, reaching between 230 million and 260 million paid Disney+ subscribers globally by the end of fiscal year 2024, and with Disney+ achieving profitability that same year," CEO Bob Chapek told investors on a conference call late Wednesday. 

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"We are enormously proud of all that we've accomplished with the service in just the first two years," he added. "It has exceeded our wildest expectations, and we are so excited for what's to come." 

Walt Disney shares were marked 8.6% lower in early trading to change hands at $159.44 each, a move that extends the stock's six-month decline to around 12.5%.

"Despite a shortfall in the near-term subscriber expectation, management reiterated its F2024 Disney+ subscriber guidance, which we view as the most important metric for the stock," said BMO Capital Markets analyst Daniel Salmon, who lowered his price target by $15, to $180 per share, following last night's earnings. 

"Near-term margin for the core business, however, is expected to be below expectations, driven by incremental investments, tight labor costs, and inflation."