Things aren’t going well for the Woke Kingdom, the Walt Disney Company, which saw a share price collapse and appears to be set for a round of layoffs after missing earning expectations by over $1 billion, with the Disney+ streaming service losing a whopping $1.5 billion. That’s a 40 percent greater loss than analysts were expecting from the woke entertainment giant’s streaming service.
Writing to executives in a letter obtained by the Wall Street Journal, Disney CEO Bob Chapek said that it is likely layoffs will have to happen at the company thanks to that weak earnings report.
In addition to the potential laying off of employees, CEO Bob Chapek announced, in the letter, more cost-saving measures that the WSJ reports include a hiring freeze at the company and more limitations on employee travel.
The WSJ report on the letter also notes that while the potential number of layoffs was not indicated in Chapek’s letter, the memo did note that the company’s Chief Financial Officer, Christine McCarthy, will be working with the company’s general counsel, Horacio Gutierrez, to review administrative spending at Disney in addition to its spending on marketing and content.
CFO McCarthy, speaking about the spending changes during he company’s earnings call in November, said that the company would be looking for opportunities for both short-term savings and ways to save money over the long term.
Chapek, writing about the upcoming changes and cost-cutting measures in the letter, reportedly said:
“I’m fully aware this will be a difficult process for many of you and your teams. We are going to have to make tough and uncomfortable decisions.”
CEO Chapek also added, in a statement on the earnings, that the streaming service will be profitable by fiscal 2024, saying:
“The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate. By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future.”
The stock price setback that Disney suffered following the earnings announcement and over $1 billion earnings miss was severe, with Disney shares collapsing by 7% on Tuesday afternoon, as MarketWatch reported.
Disney’s post-earnings call crash added to its share price troubles for the year, with the company down significantly when compared against the S&P 500 which, though down for the year, is not down as badly as Disney. MarketWatch, reporting on that, noted that:
Shares of Disney are down 35.5% this year, while the broader S&P 500 index…has dropped 20%.