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Disney Announces Earnings

The Walt Disney Company (DIS) reported its fourth quarter and full year earnings on Tuesday, November 8. The entertainment conglomerate missed revenue expectations for the quarter, resulting in its stock falling more than 11% following the release of the report.

Revenue for the quarter was $20.2 billion. This was up 9% from $18.5 billion last year at this time but fell short of analysts' expectations of $21.2 billion. Revenue for the full year was $82.7 billion, up 23% from $67.4 billion in 2021.

"2022 was a strong year for Disney, with some of our best storytelling yet, record results at our Parks, Experiences and Products segment, and outstanding subscriber growth at our direct-to-consumer services, which added nearly 57 million subscriptions this year for a total of more than 235 million," said Disney CEO, Bob Chapek. "Our fourth quarter saw strong subscription growth with the addition of 14.6 million total subscriptions, including 12.1 million Disney+ subscribers."

Disney posted net income of $254 million for the quarter or $0.09 per adjusted share. Last year at this time, the company reported a net income of $255 million or $0.09 per adjusted share.

The company's Parks, Experiences and Products segment continues to see recovery from restrictions and closures stemming from the COVID-19 pandemic and brought in revenue of $7.4 billion, an increase of 36% from $5.5 billion one year ago. The company's Media and Entertainment Distribution division reported revenue of $12.7 million, a 3% decline from $13.1 million one year ago. Disney added 12.1 million subscribers in its Disney+ streaming service, giving the company a total of 164.2 million subscribers.

The Walt Disney Company (DIS) shares ended the week of 11/7 at $96.01, down 5.8% for the week.

AMC Releases Earnings

AMC Entertainment Holdings, Inc. (AMC) released its third quarter earnings report on Tuesday, November 8. The company saw a rise in its net losses for the quarter causing its stock to fall almost 10% following the earnings release.

The company reported revenue of $968.4 million during the quarter. This was up 27% from $763.2 million in revenue during the same quarter last year, exceeding analysts' estimates of $961.1 million.

"Exactly as anticipated and foreshadowed on our last quarterly earnings call, our third quarter results were impacted by a particularly soft industry-wide box office in the latter two-thirds of the 2022 third quarter," said AMC CEO, Adam Aron. "But encouragingly our overall per-patron metrics for both admissions revenue and food and beverage spending remain well above pre-pandemic levels."

AMC reported quarterly net losses of $226.9 million, a 2.7% increase from net losses of $224.2 million last year at this time. The net loss was $0.22 on an adjusted per share basis, remaining unchanged from a net loss of $0.22 per adjusted share in the prior year's third quarter.

The Kansas-based movie theater operator attributed its revenue growth to its increase in both attendance and concession revenue with new movie releases continuing into the holiday season. AMC attributed its increased net losses to rising operating costs of $1.1 billion for the quarter compared to $908 million the previous year. The company reported over 53.2 million attendees at its domestic and international theaters for the quarter compared to 39.9 million attendees in the prior year's quarter. As a result of increased attendance, food and beverage revenue came in at $333.3 million, up from $265.2 million last year.

AMC Entertainment Holdings, Inc. (AMC) shares ended the week at $7.20, up 29.5% for the week.

Rivian Rolls Out Third Quarter Earnings

Rivian Automotive Inc. (RIVN) posted its third quarter earnings report on Wednesday, November 9. Despite the electric automotive company's revenue falling short of expectations, the company's stock rose 5% after the report's release.

The company reported revenue of $536 million for the third quarter but missed market estimates of $551.6 million. Rivian began production of customer vehicles in late 2021 and reported $1 million in revenue for the third quarter of fiscal 2021.

"The past year has represented important progress for Rivian's long-term success," said Rivian in its shareholder letter. "We launched four variants across our consumer and commercial vehicle platforms, were awarded MotorTrend's Truck of the Year along with other media accolades, produced more than 15,000 vehicles and continue to ramp our production."

The company posted net losses of $1.88 billion for the quarter, compared to $12.21 billion during the same quarter last year. The adjusted loss per share was $1.57, better than Wall Street's estimates of $1.82 per share.

Rivian produced 7,363 vehicles during the quarter, compared to 386 vehicles delivered during the third quarter of 2021. The company also announced that its preorder backlog reached 114,000 in the third quarter. Rivian maintained its 25,000-vehicle production target for the year. The company cut its 2022 capital expenditures guidance from $2 billion to $1.75 billion to help reach its production goals at lower costs. The company anticipates operating losses to reach $5.45 billion for fiscal 2022.

Rivian Automotive Inc. (RIVN) shares ended the week at $34.90, up 7.2% for the week.

The Dow started the week of 11/7 at 32,454 and closed at 33,748 on 11/11. The S&P 500 started the week at 3,781 and ended at 3,993. The NASDAQ started the week at 10,517 and finished at 11,323.

Treasury Yields Fall

U.S. Treasury yields fell during the holiday week as markets reacted to the latest inflation data. Treasury yields continued their downward trend in response to rising unemployment claims.

On Thursday, the U.S. Department of Labor announced that the consumer price index (CPI), which measures the cost of dozens of everyday consumer goods, rose 0.4% in October, a slowdown from economists' expected growth of 0.5%. The CPI reached 7.7% year-over-year, returning lower than economists' estimated growth of 7.9%.

"Inflation is still too high, but there is evidence that the Fed has turned the corner in its fight and that the pace of future interest rate increases will begin to slow," said chief economist at FWDBONDS, Christopher Rupkey. "The market is on fire with the long-wished for inflation moderation finally starting to appear."

The benchmark 10-year Treasury note yield opened the week of November 7 at 4.16% and traded as low as 3.81% on Thursday. The 30-year Treasury bond opened the week at 4.25% and traded as low as 4.05% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased 7,000 to 225,000 for the week ending November 5, exceeding analysts' estimates of 2,000. Continuing unemployment claims increased 6,000, reaching 1.49 million.

"Layoff announcements from larger companies have become more frequent," said economist at Jefferies, Tom Simons. "So we are likely to see this number rise in the weeks and months ahead."

The 10-year Treasury note yield finished the week of 11/7 at 3.82%, while the 30-year Treasury note yield finished the week at 4.01%.

Mortgage Rates Hold at Record Highs

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 10. 30-year mortgage rates remain at historic levels in response to intensifying monetary policy to curb inflation.

This week, the 30-year fixed rate mortgage averaged 7.08%, up from last week's average of 6.95%. Last year at this time, the 30-year fixed rate mortgage averaged 2.98%.

The 15-year fixed rate mortgage averaged 6.38% this week, up from 6.29% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.27%.

"As the housing market adjusts to rapidly tightening monetary policy, mortgage rates again surpassed 7%," said Freddie Mac's Chief Economist, Sam Khater. "The housing market is the most interest-rate sensitive segment of the economy, and the impact rates have on homebuyers continues to evolve. Home sales have declined significantly and, as we approach year-end, they are not expected to improve."

Based on published national averages, the savings rate was 0.21% as of 10/17. The one-year CD averaged 0.71%.

Published November 11, 2022

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