Q1 2020 Analysis
Our quick take on some of the first quarterly earnings reports after the COVID-19 Pandemic
Disney, Uber, and other iconic companies affected by the Corona virus crisis report their quarterly earnings. Was it as bad as we all feared? Can investors expect going forward? What should you do?
The Walt Disney Company, Inc.
“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” said Robert A. Iger, Disney's CEO
The Walt Disney Company (NYSE: DIS) today reported earnings for its first fiscal quarter ended December 28, 2019. Diluted earnings per share (EPS) from continuing operations for the quarter decreased 37% to $1.17 from $1.86 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter decreased 17% to $1.53 from $1.84 in the prior-year quarter.
On Friday, May 6, 2020, Disney's stock closed at $109.16 down 26.29% for the year. Free cash flow, in our opinion a key metric for any company, was down 68% compared to last year 's, from $904 million to $292. The future looks bright for Disney, however, thanks to its "incredible collection of brands, outstanding content and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”
Results for the current quarter reflect the consolidation of TFCF Corporation (TFCF) and Hulu LLC (Hulu), which the Company started consolidating on March 20, 2019. In our opinion, Disney looks well position for the future and a good investment at current prices.
Uber Technologies, Inc
Uber Technologies, Inc. (NYSE: UBER) announced a quarterly loss of $2.9 billion, but the results were encouraging for some speculative investors, judging by the fact that the stock is actually up about 6% for the year. Here are the financial highlights:
Gross Bookings grew to $15.8 billion, up 8% year-over-year, or 10% on a constant currency basis, with Rides declining 3% and Eats growing 54% year-over-year, respectively, on a constant currency basis.
Revenue growth of 14% year-over-year, or 16% on a constant currency basis.
Unrestricted cash, cash equivalents and short-term investments were $9.0 billion.
“While our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” said Dara Khosrowshahi, CEO.
Investors appeared to echoed the sentiments of Nelson Chai, Uber's CFO, that “Our ample liquidity provides us with substantial flexibility to navigate the current crisis, but we are being proactive and taking actions to emerge stronger and more focused as a company.” The company also said that "along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up. Our global footprint and highly variable cost structure remain an important advantage, as our expectation is that the Rides recovery will vary by city and country.”
In our opinion, Uber continues to be a good long term bet on the future of transportation, due to their strong brand recognition globally plus their demonstrated willingness and ability to innovate. Young and adventurous investors should consider owning some #Uber.
Meanwhile, in Elon Musk's Universe
Tesla, Inc. (Nasdaq #TSLA) filed a lawsuit asking a federal judge to allow the electric-car maker to reopen its lone U.S. assembly factory. Local officials are refusing to allow the reopening, insisting that factories must remain closed to fight the #covid19 crisis.
The lawsuit, filed Saturday, followed a new string of messages on #twitter by Chief Executive Officer #ElonMusk, saying he is ready to abandon California as the company’s home after Alameda County officials said Tesla can’t resume production even as the state begins to start reopening.
Mr. Musk, through Twitter, said Saturday that: “Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!”