Let’s dive in:
Disney definitely can write home about the growing success of its Disney+ streaming service, but Covid-19 continues to slam its overall earnings.
- Revenue and operating income fell by 23% and 82%, respectively, in the quarter ending in September. It was an improvement from last quarter but still highlights the ongoing pressure of the pandemic.
- The bulk of the decline came from Disney’s theme parks business. Even with increased production and programming costs at ESPN, Disney’s TV networks’ revenue improved by 11% on the back of growth at FX, the Disney Channel and ABC.
- Disney+ finished the quarter with 73.7 million global subscribers, 28% higher than the end of June. Disney’s direct to consumer and international division, which houses its streaming business, saw revenue growth of 41% to $4.8 billion, and its loss shrink to $580 million from $751 million.
Tencent posted better-than-expected results this quarter, mainly on the back of Chinese mobile games such as Peacekeeper Elite and Honour of Kings.
- The company’s online gaming revenue grew 45%, and net profit rose 89%. Tencent’s shares briefly improved by as much as 3.9% Friday.
Palantir is set to blow away last year’s revenue after a robust third quarter.
- Revenue grew 52% year-over-year to $289 million in Q3. The company raised its full-year revenue guidance to $1.072 billion, which would signal a 44% rise over last year’s $743 million mark.
- Palantir’s stock dropped 8.7% Thursday but has climbed 46% since going public in September.
Cisco is optimistic about the company’s future even after posting a sales dip in the latest quarter.
- Sales fell 9% (for a second consecutive quarter year-over-year) in the company’s fiscal first-quarter as customers continue to hold back on hardware purchases due to the pandemic.
- On an earnings call, CEO Chuck Robbins said he expects customer spending to bounce back as companies “grow accustomed to reality.” Cisco projects sales will be near flat at down 2% in the current quarter.
- Cisco’s revenue was $11.9 billion, a 9% decrease year-over-year, for the quarter ending Oct. 24. It also posted a net income of $2.2 billion, which was 26% beneath last year’s mark.
Bonus: DoorDash’s revenue jumped 226% through the first nine months of 2020 to $1.9 billion and narrowed its net loss from $533 million in the (nine-month) year-ago period to $149 million.
Disney ($DIS) is still underperforming in its theme park business but outperforming in its digital media business. But the strong growth in digital media plus a stable media network business leads me to believe that $DIS might provide a good mix of growth and return-from-home exposure. It’s trading at 17x 2021 and 14x 2022 estimated fiscal year EBITDA, which is higher than historical multiples, but given Disney now has growth opportunities long term, I’ll be looking into it more closely.
We’ve seen significant gains since we’ve included Tencent ($TCEHY) on the ROIC Big Board, but the stock looks like it’s getting close to “fairly priced” at 25x forward EBITDA. But then again, companies like this are most likely long-term compounders as long as they stay in favor with the Chinese government. For now, $TCEHY looks like a good hold for exposure to the Chinese economy.
We talked about Palantir in last night’s Live Stream. I like the business but think there are much more compelling B2B growth stocks that we’re able to buy. This one gets a lot of press and hype because of its Silicon Valley aura and government-agency mystique.