Entertainment giant Walt Disney’s (NYSE:DIS) streaming business is not yet profitable. However, Disney’s CEO, Robert Iger, is optimistic about the segment’s prospects, primarily Disney+, which has grown at a breakneck pace over the past few years despite losing paid subscribers in the first quarter of fiscal 2023.
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Speaking at the Morgan Stanley Technology, Media, and Telecom Conference, Iger said that the strength of its content had driven the subscriber base at Disney+. However, the company needs to rationalize costs, attract more customers, and focus on the pricing strategy to turn Disney+ profitable.
Iger added, “In our zeal to grow global subs, I think we were off in terms of that pricing strategy. And we’re now starting to learn more about it, and to adjust accordingly.”
Notably, Disney’s Direct-to-Consumer business reported an operating loss of $1.1 billion in Q1, reflecting a higher loss at Disney+. The increase in programming, production, and technology costs at Disney+ weighed on the segment’s profitability.
Earlier, the company announced a restructuring plan to accelerate its growth and profitability. The company is targeting $5.5 billion in cost savings across the company. On the content side, Disney expects $3 billion in cost savings over the next few years. Moreover, it expects Disney+ to achieve profitability by the end of Fiscal 2024. Also, Disney plans to reinstate its dividend by the end of this calendar year.
What’s the Prediction for Disney Stock?
Disney stock is up about 10% year-to-date. It sports a Strong Buy consensus rating on TipRanks, reflecting 17 Buys and two Hold recommendations. Moreover, these analysts’ price target of $128.24 implies 33.39% upside potential.
