Disney Magic, Burritos, AI, and the Super Bowl

Editor’s Note: I know it sounds un-American to say this, but I have zero interest in the Super Bowl. I’m not a sports fan — nor am I a pop music fan. I have never watched a Super Bowl game, and this year will be no exception.

Instead of watching the game, every year, I take advantage of the fact that there are no cars on the roads and no people in the stores. It’s a great time to do your shopping.

Anyway, let’s get to it.

A ‘Magical’ Quarter for Disney

Walt Disney’s (NYSE: DIS) stock has been on the move this week following the company’s first-quarter earnings report and some big announcements.

Apparently, the company will use its streaming service, Disney+ to show an exclusive cut of pop star Taylor Swift’s recent concert film. The company also said that it will finally launch its ESPN streaming service by the end of 2025.

But Disney also announced that it is investing $1.5 billion into a partnership with Fortnite maker Epic Games. Through the partnership, the video game company will create games using Disney’s intellectual property.

“Our new relationship with Epic Games will create a transformational games and entertainment universe that integrates Disney’s world-class storytelling into Epic’s cultural phenomenon, Fortnite, enabling consumers to play, watch, create, and shop for both digital and physical goods,” on-again-off-again Disney CEO Bob Iger said on an earnings call.

Earnings per share (EPS) for the first quarter hit $1.22 — higher than the Wall Street forecast of 99 cents.

However, Disney’s revenue remained flat at $23.5 billion. Analysts had expected the company to report $23.8 billion in revenue.

Disney also reported that, during the first quarter, it lost 1.3 million Disney+ subscribers. That’s significantly higher than the 700,000 subscriber loss Wall Street had been expecting.

Still, in the first quarter, the company’s monetary losses from streaming shrunk from $984 million in the year-ago quarter to $138 million. But Disney believes its streaming services will turn profitable this year.

“We continue to expect to reach profitability at our combined streaming businesses in the fourth quarter of fiscal 2024,” the company said. “We believe this business will ultimately be a key earnings growth driver for the company.”

Disney also rewarded its shareholders with the announcement of a $3 billion stock buyback plan, in addition to a dividend boost of 50%.

The House of Mouse has recently been targeted by activist investor Nelson Peltz. Peltz has been engaged in a proxy battle with Disney and has asked shareholders to nominate him and former Disney Chief Financial Officer Jay Rasulo to the company’s board of directors.

However, Bob Iger had this to say: “The last thing we need right now is to be distracted by an activist or activists that have a different agenda and don’t understand our company.”

Chipotle’s Burrito Beat

Chipotle (NYSE: CMG) is having a good year so far. The company reported a fourth-quarter earnings beat, in addition to an increase in foot traffic by 7.4%.

The fast-casual restaurant chain reported revenue of $2.52 billion, versus Wall Street’s forecast of $2.49 billion.

And adjusted earnings per share (EPS) for the fourth quarter came in at $10.36, versus analyst expectations of $9.75.

Net income for the quarter totaled $282.1 million, or $10.21 per share. That’s a significant boost from the $223.7 million, or $8.02 per share, reported for the fourth quarter of last year.

At the same time, same-store sales increased by 8.4% — again, higher than what analysts had been expecting (7.1%).

According to Chipotle CEO Brian Niccol, the key to the company’s success is its ability to offer good food at affordable prices.

“What we hear back, time and time again, is when we do great culinary, terrific speed, terrific customization, at the prices we’ve been able to maintain, we’re really affordable and folks view us as a terrific value,” Niccol told CNBC this week. “So we keep a really close eye on that, and I think you’re seeing that in our transactions as a result of it.”

For the full year, Chipotle expects same-store sales to grow by the mid-single digits. The company is also expecting to open more than 300 new stores.

This Year’s Forecast Super Bowl Spend

According to the National Retail Federation (NRF), Super Bowl spending is expected to hit $17.3 billion this year. That’s $86.04 per household.

Believe it or not, when adjusted for inflation, this year’s Super Bowl spend has yet to catch up with pre-COVID figures.

Adjusted for 2024’s high prices, Americans spent $20.5 billion on the 2020 Super Bowl — just before the pandemic hit the U.S.

Take a look:

Infographic: Inflation-Adjusted Super Bowl Spending Still in a Rut | Statista You will find more infographics at Statista

Palantir’s ‘AWS Moment’

Chipotle and Disney weren’t the only stocks on the rise this week.

Shares of Palantir Technologies (NYSE: PLTR) rose by more than 30% after the software company reported a strong revenue beat for the fourth quarter.

According to Palantir, fourth-quarter revenue increased by 20%, to $608.4 million. Wall Street analysts had expected revenue of $602.4 million.

According to Palantir CEO Alex Karp, “unrelenting” demand for artificial intelligence (AI) language models was behind the strong fourth quarter.

However, how far can Palantir go? The defense and intelligence software stock has already gained more than 160% in the last 12 months.

Palantir’s chief technology officer, Shyam Sankar, thinks there’s still plenty of growth left in his company. During the fourth-quarter earnings call, he compared the company’s future to that of Amazon’s (NSDQ: AMZN) when it ramped up its cloud computing unit, Amazon Web Services (AWS).

“Turning to government, Palantir is experiencing its own Amazon.com-to-AWS moment, taking exquisite first-party technology that supports the largest-scale defense tech player and making it available for third parties to build on and win,” he said.

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