Disney Shares Slump Despite Earnings Beat, Musk on AI, Markets' Win Streak 05/07/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:13)

Good Tuesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer at Post 9 of the New York Stock Exchange. David Faber is at the Milken Institute Global Conference in Los Angeles. Pretty steady pre-market as the Dow rides this four-day win streak. Disney earnings are definitely top of mind this morning, along with an Apple iPad event in about an hour. Bond yields and oil are lower.

A roadmap's gonna begin with Disney, better than expected, with some streaming numbers nearly break even, but shares, as you just heard, under pressure.

David Faber (0:42)

Plus, Elon Musk re-ups his AI warning, saying it will overtake biological intelligence.

And speaking of AI, I'll be joined by the man that Sam Maltman calls his secret weapon at OpenAI, as well as former Treasury Secretary Steven Mnuchin, both, of course, here at the Milken Institute Global Conference. We're in Los Angeles. That'll be over the next couple of hours. Carl?

Carl Quintanilla (1:05)

All right, let's begin with Disney, guys. Lower in the pre-market, got this slight miss on sales, overshadowing an earnings beat and some raise guidance. Narrowly, overall streaming losses to about $18 million. Disney Plus and Hulu with a surprise profit. Traditional TV revenue, box office sales did see a decline in the period, Jim. And as Julia just pointed out, although parks and experiences up 10, some moderation they see in post-COVID travel.

Jim Cramer (1:29)

Yeah, look, when you go over the actual numbers, the ARPU, the average revenue per user for the streaming is quite good.

Now, I know there are people who say, well, India is, they lose India, but India was 70, the amount of money they were making on an Indian sub versus what they're making domestic, it was quite different. Would I go into this train wreck and buy it here? It's not a train wreck. Frankly, I didn't expect the parks, any park to be as strong. We do have to worry Comcast, parent-companist network did have good parks. I don't think the parks attendance starting to normalize is all that negative. If I should just say this is an overreaction, the stock is down from 121 There's a belief that the magic is not back. That seems wrong to me.

I would take the other side of the trade after these sellers try to make themselves right at the opening, take it down 10, because this is simply not that bad of a set of numbers.

Carl Quintanilla (2:24)

David, we mentioned the streaming losses. If you exclude ESPN+, there is a profit, but it does look like they are on track to getting that by Q4.

David Faber (2:35)

Yeah, I mean, I think it's interesting, and I'll come back to Jim on sort of his reaction, because coming in, Jim, I think a lot of investors would have said if you gave us this kind of a number for direct-to-consumer, namely profitable, except as Carl said, except for some sports stuff, and or on the way to clear profitability, that might have been seen as a positive, not to mention parks obviously strong. It is the guidance clearly that is weighing on the stock right now, Jim, for this next quarter, for operating income from DTC, and more importantly, from experiences. But overall, I would think you have to argue they're on track to sort of hit the things that they've talked about hitting in terms of from the beginning of the year.

Jim Cramer (3:20)

Yeah, exactly. And I think that, David, one of the things that we can never let ourselves do, what we often let ourselves do, is look at the stock price and decide, therefore, let's find out why it's really bad.

The fact is, is that they guided to a good, overall good number of good gains over the year. Maybe there's some weak this year, but Carl, if we define ourselves by what pre-market trading has been during this entire year, we will have made fools of ourselves. And I'm not buying into the fact that this stock is down nine if they had a bad last five weeks. Now, I've been no fan of what's going on at Disney. I think that's obvious. I did favor Peltz. I've been vocal about that. I don't really care about the consequences of being pro what Peltz wanted to do. This is the regime that we have. I think Hugh Johnson's a terrific CFO. I think Bob Iger's doing a good job. And frankly, the fact that the stock's down this much is I think it wrong. I think it's wrong. I think it's a good opportunity to get in for the next year.