Fast Money Blog- 2/10/23
Yet another busy week on Wall Street. As I’ve often said, to be successful in the stock market you have to pay close attention to both the top and bottom line on every company whose shares you own.
Let's get started with a brief from the Federal Reserve Chairman Jerome Powell.
On Tuesday, February 7th, Chairman Powell indicated that inflation is indeed declining, and that although there is still a long way to go, the process of getting inflation down has begun in the goods sector. Powell also said the Fed will react in relation to labor market data to get the inflation rate back to 2%.
On Wednesday, February 8th, The Walt Disney Company (DIS) released Q1 2023 earnings results. The company reported top-line revenue for the quarter of $23.5 billion, up 8% year-over-year.
As a Wealthy Investor here’s what you need to know:
Disney derives its revenue from 2 primary segments: their Parks & Experiences segment and their Media & Entertainment Distribution segment.
Parks & Experiences quarterly revenue (which includes theme parks, resorts, cruise line and merchandise business) was $8.7 billion, up 21% from last year.
Revenue for the Media & Entertainment Distribution segment (which includes their streaming services) was $14.7 billion for the quarter, up 1% year-over-year.
Direct-to-Consumer streaming services revenue for the quarter increased 13% year-over-year to $5.3 billion.
However, Disney + reported its first subscriber decline, losing 2.4 million subscribers in the quarter, bringing its total to 161.8 million.
Here’s the really bad news for Disney:
In Q1 they lost $1.05 billion, largely due to Disney +.
If you recall, in 2022 the company suspended its dividend indefinitely. This is not good news for shareholders because there is no incentive to drive the stock price higher.
Understanding a corporation’s fundamentals, such as top-line revenue and net income, in addition to knowing what business divisions produce that income, will be crucial to your trading and investing success as we move forward.
On Thursday, February 10th, PayPal Holdings Company (PYPL) released their Q4 2022 earnings with total revenue of $7.4 billion, a growth of 7% year-over-year.
TPV (total processing volume) for the quarter came in at $357.4 billion, up 9% year-over-year.
In addition, in Q4 PayPal added 2.9 million new active accounts, bringing their total to 435 million active accounts, up 2% year-over-year.
In another area of growth, since launching Buy Now Pay Later in 2022, PayPal has issued over 200 million loans to nearly 30 million customers.
Overall, for calendar year 2022, PayPal's total revenue was $27.5 billion, up 8% year-over-year.
Here’s the big takeaway from this week’s earnings results: given the current state of financial affairs at the Disney company I can not recommend purchasing additional shares.
By contrast, even though PayPal shares have fallen quite a bit and are off of their 52 week high, I recommend PYPL as a good long-term hold. If you currently own shares at a higher price, be patient - you are now a long-term investor.
Stay Open! Stay Positive!
Tyrone Jackson, The Wealthy Investor