What’s going on?

• Disney announced stronger-than-expected 2Q/2021 earnings.

What does this mean?

• Disney’s theme parks, experiences, and products segment speaks have been the main drivers that return profitability to Disney for the first time since the pandemic began.
  • Most of the segment’s profit came from people buying merchandise.
  • As Disneylands is getting busier again, it probably won’t be long until the parks become profitable by selling tickets.
• While Disney+ is still a bet for Disney to continue making loss, the scene is becoming clearer thanks to a higher-than-expected paying-customer base of 116m, closing the gap with its enemy Netflix (which has been through a tough time).

Why should I care?

The bigger picture: Indoor and outdoor activities

• Following the news, Disney’s share price rose 3%.
• While the average Disney+ subscriber might be paying a lower price than predicted, long-term profitability is expected as the number of subscribers is still adding faster.
• Theme parks’ reopenings, which promises more profit in the short term too. But since they’re largely an outdoor pursuit, those parks should prove relatively pandemic-proof in case coronavirus comes back again for the worse.

Zooming out: Good news is in the eye of the beholder

• Airbnb also announced a better-than-expected 2Q/2021, but its stock initially fell 3% afterwards.
• As the quantity of new virus variants is still largely unknown, Airbnb warned investors that Q3/2021’s bookings (and cancellations) could lead to disappointing sales.

Content source: Finimize (2021) Where The Magic Happens. Available at: https://www.finimize.com/wp/news/where-the-magic-happens/ [Accessed on Aug 16, 2021]