Walt Disney’s (DIS) recent earnings gave us a good look at a company navigating intense industry shifts, and unfortunately, things aren’t going smoothly. The entertainment powerhouse peaked between 2012 and 2019, buoyed by the success of its Marvel, Star Wars, and Pixar films, including the launch of Disney+ in 2019. In 2025, Disney’s fortunes have changed despite a brief gurgle of outperformance following the COVID-19 pandemic a few years back.
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In Q4 results published on February 5, while total revenues magically crept up 5% year-over-year to $24.7 billion in its Q4 2024 results, Disney’s legacy TV decline and growing pains in its direct-to-consumer (DTC) division remain formidable hurdles. Parks & Experiences once again came through as the main engine of growth, yet there are signs that Disney’s ship is taking on water as it traverses increasingly rougher market seas.
Combine that with an overvalued share price despite its prolonged lagging of peers and benchmarks, not to mention anemic capital returns, and I see more risk than reward at current levels.
PayPal Holdings (PYPL) Price and Analysis over the past 5 years
Despite the stock sporting a small dividend and being one of the most recognizable global brands with long-term commercialization potential, its valuation has progressively worsened since the COVID-19 pandemic.
Disney’s linear TV networks continue to wind down—a trend I’ve been tracking across the industry as more consumers cut the cord. This quarter, linear TV revenue slid 7% to $2.6 billion, while operating income dipped 11% to $1 billion. If you’ve been watching the media space, none of this is a shock. As you know, traditional TV faces a structural decline as viewers flock to streaming platforms.
Domestically, political ad spending gave linear revenues a temporary life raft, but lower impressions and overall cord-cutting more than offset this gain. Disney’s international side fared worse, with revenues plunging 31% following the shift of Star India assets into a joint venture with Reliance Industries. In my view, we can expect further erosion in the division as consumers grow ever more satisfied with on-demand platforms.
Interestingly, Disney’s management seems more focused on managing the decline of these assets rather than making significant changes, reflecting what appears to be an industry-wide belief that linear TV’s peak days are long past.
Story Continues
On the brighter side, Disney’s DTC division finally posted a noteworthy operating profit, bringing in $293 million following a $138 million loss last year. Top-line numbers looked bright, too, with revenue up 9% to $6 billion, driven by recent price hikes and stronger ad sales. Seeing Disney achieve profitability here is a key milestone, signaling that management has finally figured out how to balance costs in such a brutally competitive space.
Walt Disney earnings, revenue amd profit margin history
However, subscriber figures remain a mixed bag. Disney+ Core lost 700,000 subscribers to now have a total of 125 million. For perspective, Hulu notched a modest 3% growth to 53.6 million. Netflix (NFLX) still crushes Disney+ in sheer scale, boasting 301.6 million paying subscribers globally while celebrating record subscriber ads in the same calendar period (Q4 for Netflix).
Meanwhile, Amazon Prime (AMZN) and Apple TV+ (AAPL) continue to expand, leaving the market crowded while consumers are picky. Thus, Disney may finally be hitting the wall in its efforts to further grow its DTC division.
Looking at Disney’s Parks & Experiences division and its numbers in isolation, it’s hard to ignore the stability it provides for the broader company. Revenue hit $9.4 billion, up 3% year-over-year, reflecting how deeply embedded Disney’s theme parks are in the cultural fabric.
And yet, a 5% dip in domestic operating income, largely thanks to hurricane-related closures and costs tied to new cruise ships, signals that growth is becoming trickier. International parks did better, with operating income surging 28% on robust guest spending, but how much room is there for further revenue growth?
Walt Disney (DIS) Revenues History
Per-capita spending is still robust—visitors are willing to pay a premium for the Disney experience—but attendance seems to be plateauing. Hiking ticket prices indefinitely isn’t exactly a long-term strategy.
While the new cruise line expansions might capture some extra dollars, launching massive ships like the Disney Treasure comes with hefty upfront investments, evident in the declining free cash flow in Q4 2024. In my view, Disney’s Parks & Experiences may be close to hitting saturation point in the near term and may even require further investment before the business unit returns to its majestic good times.
Given Disney’s soft results, the stock doesn’t strike me as a bargain despite its lagging performance over the past year. You could argue that the market has already priced in most of the linear TV declines and streaming uncertainty, yet I believe there’s more downside risk if streaming growth doesn’t ramp up as quickly as hoped.
Meanwhile, Disney’s capital returns remain minimal. Both the dividend and buybacks are negligible. Along with Disney still trading at a forward P/E of about 20x, I am not compelled to justify the execution risks tied to the linear TV unwind and the uphill streaming battle.
Walt Disney (DIS) Dividend Yield Range from 2018 to 2025
Wall Street’s outlook on DIS stock seems more encouraging than mine. In New York, BBAI stock carries a Strong Buy consensus rating based on 18 Buy, six Hold, and zero Sell ratings over the past three months. Walt Disney’s average price target of $128.32 per share implies a 16% upside potential from current levels.
Walt Disney (DIS) stock forecast for the next 12 months including a high, average, and low price target
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Disney’s various segments tell an elaborate story of a company trying to find its footing in a transformed media landscape. The stock still looks overpriced for a business facing uphill battles in linear TV, DTC subscriber growth, and park capacity constraints.
My take is that Disney’s good news, like the DTC profit milestone, doesn’t offset the harsh realities ahead. So, while I’d be happy to see fresh catalysts that spark genuine upside, I can’t find a compelling reason to invest in this diversified entertainment and media enterprise right now.
