Disney Stock Plunges Despite Record Parks Revenue

Shares of Walt Disney Co. took a sharp tumble this week, falling more than 7% by the close of trading on February 2, 2026, despite the entertainment titan reporting first-quarter earnings that outpaced Wall Street’s expectations. The drop, which left Disney stock trading at $104—nearly 20% below its 52-week high of $125—reflects mounting investor anxiety over the company’s shifting profit engines and ongoing strategic challenges, even as some divisions posted record-breaking results.

According to analysis by The Motley Fool, Disney’s revenue for the quarter ending December 27, 2025, climbed 5% year over year to $26 billion. Adjusted earnings per share landed at $1.63, surpassing the consensus estimate of $1.58. Yet, that headline beat wasn’t enough to calm nerves on Wall Street. The company’s adjusted EPS actually fell 7% from the prior year, as higher programming and production costs—particularly those tied to integrating Fubo’s operations into Hulu + Live TV—took a bite out of margins. Operating income in Disney’s entertainment division, which spans broadcasting, cable, film studios, and streaming, plunged 35% to $1.1 billion.

The sports side of the business didn’t fare much better. ESPN’s operating profit dropped 23% to $191 million, with rising sports rights costs and a shrinking subscriber base weighing on results. A temporary blackout of Disney networks on YouTube TV during the fall cost the company about $110 million in operating income, as reported by TIKR.

Yet, in the midst of these headwinds, Disney’s Experiences segment—home to its theme parks, resorts, and cruise lines—delivered a bright spot. For the first time ever, the division topped $10 billion in quarterly revenue. Domestic parks pulled in $6.91 billion and international parks added $1.75 billion, both up 7% year over year. Operating income for Experiences reached $3.31 billion, a 6% increase from last year, according to Disney CFO Hugh Johnston.

However, management tempered enthusiasm by warning that second-quarter growth would be modest. Softer international visitation at domestic parks, pre-launch costs for a new Disney Cruise ship, and pre-opening expenses for the much-anticipated World of Frozen expansion at Disneyland Paris are all expected to slow operating income growth in the lucrative Experiences division. As The Motley Fool summarized, “slowing traffic trends at its domestic parks, pre-launch costs for a new Disney cruise line, and pre-opening costs for World of Frozen at Disneyland Paris would combine to slow operating income growth at the company’s lucrative experiences division.”

Disney’s streaming business, meanwhile, continued to show promise. Revenue from streaming grew 11% to $5.35 billion, buoyed by higher subscription fees and the inclusion of Fubo, which Disney acquired in October. The company expects its streaming unit to generate about $500 million in operating income next quarter, up roughly $200 million year over year. Disney also integrated Hulu into Disney+ and launched ESPN’s direct-to-consumer streaming platform. However, in a move mirroring Netflix, Disney stopped disclosing subscriber numbers this quarter—a decision that left some analysts and investors scratching their heads.

The company’s theatrical arm remains a global powerhouse. In 2025, Disney generated over $6.5 billion at the global box office, making it the third-biggest year in its history. “Zootopia 2” became the highest-grossing animated film of all time with $1.7 billion, while “Avatar: Fire and Ash” crossed the $1 billion threshold. CEO Bob Iger highlighted that 37 of the 60 films ever to reach $1 billion at the box office have come from Disney studios.

Despite these wins, the market’s reaction was unmistakably skeptical. As TIKR noted, “the selloff in Disney stock reflects investor worries about slowing momentum in the company’s profit engine.” The entertainment division’s 35% drop in operating income and the sports segment’s 23% decline in profit were simply too large to ignore, even as other areas shone.

Financial analysts, however, remain largely bullish on Disney’s long-term prospects. On February 3, 2026, UBS maintained its Buy rating on Disney shares and set a price target of $138.00, according to Investing.com. The firm adjusted its quarterly operating income expectations to $4.4 billion for Disney’s fiscal second quarter, down from $4.9 billion, attributing the change mainly to timing factors. UBS expressed continued confidence in Disney’s ability to sustain double-digit earnings per share growth, pointing to growth drivers in direct-to-consumer streaming and new cruise capacity and attractions in the Experiences segment.

Disney reported $19.42 billion in EBITDA over the last twelve months, with a diluted EPS of $6.85. Analysts are forecasting $6.58 for fiscal 2026. UBS expects fiscal 2026 revenues exceeding $102 billion and segment operating income of $19 billion, representing 8% year-over-year growth. EPS estimates were slightly adjusted to $6.73 for fiscal 2026 and $7.88 for fiscal 2027, reflecting 13% and 17% growth respectively. Notably, Disney shares currently trade at about 16 times fiscal 2026 estimated EPS and just 13 times fiscal 2027 estimates—below the stock’s historical average of 18 times earnings, suggesting potential undervaluation.

Dividends have also been a bright spot for shareholders. Disney has raised its dividend for three consecutive years, with dividend growth of 66.67% in the last twelve months, per InvestingPro data. The company expects to generate $19 billion in full-year operating cash flow for fiscal 2026 and plans to repurchase $7 billion in stock.

Leadership changes are also on the horizon. On March 18, 2026, Dana Walden will become president and chief creative officer, while Josh D’Amaro will step up as the new CEO, succeeding Robert A. Iger. This leadership transition comes as Disney’s board meets to finalize the succession plan, with both Walden and D’Amaro seen as strong candidates. Iger himself acknowledged the importance of the handoff, stating during Monday’s earnings call, “I also believe that in a world that changes as much as it does, trying to preserve the status quo was a mistake, and I’m certain that my successor will not do that.”

Other major Wall Street firms are also weighing in. JPMorgan maintained its Overweight rating and a $138.00 price target, while BofA Securities trimmed its target to $125.00 from $140.00 but kept a Buy rating, citing near-term segment performance concerns. KeyBanc highlighted that domestic parks exceeded expectations, though challenges persist for international visitors. Bernstein SocGen Group held its Outperform rating, setting a price target of $129.00, even after Disney shares fell following the latest earnings report.

With Disney stock trading well below its recent highs and investors demanding evidence of sustainable growth beyond theme parks, the pressure is on for the company’s new leadership to deliver. The next few quarters will be pivotal as Disney navigates shifting consumer habits, evolving media landscapes, and the ever-present challenge of keeping its magic alive for both fans and shareholders.