Disney Crashes Despite Earnings Beat What Investors Missed

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•  13 Nov 2025
 

•   DIS  
   
  +2.13%
•   NFLX  
   
  +0.36%

The market doesn't care about your earnings beat when revenue disappoints. $DIS proved that today, plunging over 9% despite crushing analyst estimates on the bottom line with $1.11 per share versus the expected $1.02. The problem? Revenue came in at $22.46 billion, missing consensus by roughly $320 million and marking a year-over-year decline of 0.5%. Sometimes the top line tells a story the earnings per share can't hide.

For anyone holding Disney through this report, the initial reaction stings. But dig beneath the headline numbers and you'll find a company in transition, caught between a legacy business model that's bleeding and a streaming future that's finally starting to deliver. The question isn't whether Disney missed revenue expectations. It's whether the pieces falling into place justify staying invested through the turbulence.

The streaming numbers tell the story Wall Street should be focused on. Disney+ and Hulu combined hit 196 million subscribers at quarter end, adding 12.4 million in just three months. Disney+ alone crossed 131.6 million subscribers with 3.8 million sequential additions. But the real surprise came from Hulu, which surged to 59.7 million SVOD subscribers, up 17% year-over-year, while the Live TV + SVOD bundle reached 4.4 million. These aren't incremental gains. This is the kind of growth that validates a strategic pivot.

What's particularly interesting is the ARPU performance. In the US and Canada, average revenue per subscriber held steady, while international ARPU jumped from $7.67 to $8.00 thanks to favorable currency moves and mix shifts. Hulu saw slight erosion in ARPU across both SVOD and Live offerings, but Disney+ global ARPU came in at $8.04, above market forecasts. The company is threading the needle between volume growth and pricing power, a balance that's notoriously difficult in streaming.

Here's where it gets complicated for long-term investors. Starting in 2026, Disney will stop reporting subscriber counts and ARPU on a regular basis. Management frames this as a maturation of the business, similar to how Netflix eventually moved away from granular disclosure. Skeptics see it as a red flag, a way to obscure potential weakness. The truth probably lies somewhere in between. When a company stops giving you the metrics you've been tracking, you either trust the broader financial trajectory or you walk away. There's no middle ground.

The rest of Disney empire shows the strain of an industry in flux. Experiences, which includes the theme parks, delivered 6% growth with operating income holding at $1.88 billion. Sports, anchored by ESPN, ticked up 2% with operating income of $911 million, slightly ahead of expectations. But Entertainment, Disney historical core, continues to bleed. Revenue dropped 6% and operating income collapsed 35% compared to last year, driven by distribution weakness, content sales declines, and the ongoing deterioration of linear television. Theatrical took a $400 million hit to operating income compared to an exceptionally strong quarter last year.

Free cash flow dropped sharply to $2.56 billion, down 37% year-over-year, though full-year figures show relative stability. CEO Bob Iger emphasized progress, pointing to strategic execution and a strong balance sheet that allows continued investment in premium content while returning capital to shareholders. The company raised its 2026 operating cash flow guidance to $19 billion, about $2 billion above analyst expectations, and projects double-digit EPS growth in both 2026 and 2027. Disney also doubled its buyback authorization to $7 billion and increased the dividend by 50%.

Before you get too excited about those forward estimates, Q1 2026 guidance includes some headwinds worth noting. The company expects $150 million in parks opening and maintenance expenses, a $400 million drag from theatrical comparisons, $140 million less in political advertising revenue, and negative impacts from Star India operations. The first quarter will be rough. The question is whether the back half of the year delivers enough to justify optimism.

Analysts are split but leaning cautiously optimistic. Wells Fargo noted the results point to a strong year with potential for upgrades, though they warn the start will be weak. JPMorgan highlighted that guidance met expectations and the dividend hike plus expanded buyback signal confidence. Bank of America described Q1 weakness offset by second-half strength. But there's a wildcard nobody fully pricing in yet: the ongoing dispute with YouTube TV over channel carriage. If that drags on, it could accelerate ESPN erosion and weaken Disney negotiating leverage in distribution deals.

Then there's the broader context of what's happening in streaming, a phenomenon some are calling "streamflation." Over the past year, Apple TV+, $NFLX, HBO, Paramount+, and Peacock all raised prices, with some losing key content or shifting shows to separate services. Yet according to S&P Global, US households haven't cut back. They're still holding an average of three to four subscriptions and spending close to $40 per month on streaming. Cancellation rates remain stable, with Netflix holding at just 2% churn among its most loyal users. Disney+ and Hulu saw a temporary spike in cancellations during a controversy involving Jimmy Kimmel, but high sign-up rates offset the damage.

What this means for $DIS is that the company has room to keep pushing prices higher without triggering mass defections. Consumers are more likely to downgrade to ad-supported tiers than cancel altogether. That's a critical dynamic for a company betting its future on streaming profitability. The tolerance for price increases, combined with growing scale, suggests Disney streaming business could surprise to the upside over the next few years, even as linear TV continues its slow-motion collapse.

So where does that leave investors after today selloff? Disney is trading on a narrative split between near-term pain and long-term potential. The revenue miss and operating income decline in Entertainment are real problems that won't disappear overnight. Linear TV isn't coming back, and theatrical is inherently volatile. But the streaming trajectory, parks resilience, and ESPN steady performance provide a foundation. Management willingness to commit $7 billion to buybacks and hike the dividend by 50% signals they believe the worst is behind them.

If you're wondering whether to buy this dip, the answer depends on your timeline and risk tolerance. The next few quarters will be messy. But if Disney executes on its streaming strategy, leverages pricing power without hemorrhaging subscribers, and stabilizes Entertainment even modestly, the current pullback could look like opportunity in hindsight. The market tends to overshoot in both directions, and a 9% drop on a mixed quarter might be one of those moments.

For those tracking $DIS closely, this earnings report is less a verdict and more a checkpoint in a multi-year story. The pieces are moving into place, but the transition is far from complete. If you need clarity today, you'll be frustrated. If you can live with ambiguity while the fundamentals shift, the setup is getting more interesting.

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