Disney’s $1.5 billion foray into gaming

Hey Superheroes,

Following last week’s record highs, the S&P 500 has hit yet another milestone this week, going above 5,000 for the first time in history! 

Locally, the ASX 200 has trended quite flat despite the RBA keeping the cash rate steady. RBA Governor Michele Bullock earlier today kept future plans rather vague, stating that while inflation of over 4% was still too high to consider rate cuts, it didn’t mean that the RBA wouldn’t begin cutting rates before inflation hit its target of between 2-3%.

Here are this week’s stories.

Disney is partnering up with Epic Games to create an “entertainment universe” 

Walt Disney shares surged 11% overnight following quarterly earnings that beat analyst estimates. 

But much more than that, the entertainment giant announced its decision to invest in Epic Games – the developer of highly popular online game Fortnite. Who else is excited?!

📈 But first, the numbers

Since its share price high of $197 in 2021, Disney shares had continuously fallen to reach a decade low of $78 last October. The bearishness followed news of staff lay-offs, Disney+ struggling to gain subscribers and empty Disney theme parks.

However, it looks like some strategic decisions have allowed Disney to improve its bottom line. In fact, the company announced a US$3 billion share buyback plan alongside its latest quarterly earnings report.

Here are some key numbers:

• Revenue: $23.55b actual vs. $23.64b expected by analysts

• EPS: $1.22 vs. $0.99 expected

Disney noted that despite lower attendance in its theme parks, revenues in the segment jumped 7% thanks to higher customer spending. 

Similarly, Disney+ lost over a million subscribers but higher subscription prices saw the company earning more on average from remaining customers.

🎮 An Epic partnership

Perhaps the most exciting news was Disney’s decision to partner up with Epic Games. 

Investing $1.5 billion into the gaming developer, Disney revealed plans to create a gaming universe where players could “play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more.” 

Disney CEO Bob Iger cites the collab as Disney’s biggest ever foray into gaming. Will this be like… a virtual Disneyland?

Palantir’s first year of profitability

Palantir Technologies, one of Superhero’s most traded stocks, is celebrating a strong week so far with its stock up over 50% in the last five days alone.

The performance follows a strong quarter, with Palantir outperforming analyst expectations for both revenue and earnings.

🤖 Strength in AI numbers

Known for its AI-powered platforms and government contracts, Palantir’s latest report solidifies its overall profitability for FY 2023. Overall, EPS for the full year sits at $0.25. 

The company’s earnings for the quarter doubled that of the same quarter in the previous year, with Palantir forecasting continued growth into 2024. FY 2023 saw free cash flow over $730m, with Palantir’s CEO expecting this to increase to between $800m to $1b in 2024. 

🔦  Some other things we’re shining the Spotlight on:

• ALIBABA’S LACKLUSTRE SHARE BUYBACK: Despite Alibaba announcing a massive US$25b share buyback – which represents about 14% of its current market cap – the e-commerce giant saw its shares fall over 10% after its earnings report failed to impress.

• CLOUDFLARE SOARS: Cloudflare reported earnings earlier today which led to its shares soaring over 20% in the after hours market. The company beat earnings estimates by 26% thanks to more customer contracts.

• AGL POWERS UP: AGL shares gained over 10% after releasing earnings that showed it has been able to pivot from a loss of over $1b last year to $576m in profit – allowing it to reward investors with a 26c per share dividend.

Next week, all eyes will be on US inflation data which is due to be released on Tuesday. Additionally, big names including Airbnb, Coca-Cola and Shopify will be reporting earnings on Wall Street.

Keep up to date with market news and insights by following us on Instagram, @superheroau!

That’s all for this week’s Spotlight! Happy Lunar New Year!