Disney shares sank after the company reported streaming subscriber losses

Disney shares fell about 9% on Thursday after the company reported subscriber losses on Disney+ in the latest quarter.

Company, this Record of Profits and Revenues Disney+ posted a loss of four million subscribers during the period, according to Wall Street estimates. That decline was offset by price increases, which led to a $400 million reduction in operating losses in the streaming unit in the fiscal second quarter.

However, according to the Street account, Wall Street expected a gain of more than a million Disney+ subscribers, and the surprise subscriber loss threatened the Street.

Shares of the company traded at around $92 per share on Thursday. Shares are up more than 16% so far this year through Wednesday’s close.

The fall was set to wipe about $15 billion from the company’s market value.

According to a note from Paul Verna, principal analyst at research firm Insider Intelligence, Disney will face tougher streaming competition amid reduced ad budgets, Netflix’s new ad tier and continued economic uncertainty.

“While Disney has been able to stem its streaming revenue losses, it has done so mainly by raising prices, and that strategy is not sustainable in the long term,” Verna wrote. “Disney is planning another price hike later this year, but it will soon run out of intervention for further increases.”

Analysts at SVB MoffettNathanson cut their price target on the stock by $3 to $127 following the report, but maintained an outperform rating on the company. The company sees total subscriptions roughly flat in the third quarter of the fiscal year and rising in the fourth quarter of the fiscal year.

Tim Nollen, Macquarie senior media technology analyst, maintained an Outperform rating, noting that Disney “has the essential assets to make a successful transition to streaming, but it’s a multifaceted endeavor.”

“Disney is making progress both structurally and cyclically in its cost-savings and operational-efficiency efforts amid a deteriorating linear television business,” Nolan wrote in the note.

Disney CEO Bob Iger is overseeing a sweeping restructuring at the company, including roughly 7,000 total job cuts, which are scheduled to be completed before the summer.

The company said Wednesday it will add Hulu content to its Disney+ streaming app, while it expects to raise the price of its ad-free streaming service later this year.

Shares of fellow streaming services Warner Bros. Discovery and Paramount also fell on Thursday, each down 4%. Netflix shares were little changed.