Disney and NetEast Post Earnings Beats

Good morning. It's November 14th, and in today’s edition, we will cover Disney and NetEase’s better-than-expected earnings and why a quantum computing stock is surging 31% in premarket trade.

Previous Close 📈

Stocks showed signs of rally fatigue on Wednesday, with the Dow gaining a modest 47.21 points (0.11%) and the S&P 500 inching up 0.02%. The Nasdaq Composite fell 0.26%.

Futures

U.S. stock futures are dipping slightly today, with Dow futures down 56 points, S&P 500 futures slipping 0.12%, and Nasdaq 100 futures off 0.21%. The October Producer Price Index (PPI) data could further impact the market outlook, alongside Friday’s retail sales report.

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What to Watch

Walt Disney Company (NYSE: DIS) and JD.com (NASDAQ: JD) will release their earnings before the market opens today. Applied Materials (NASDAQ: AMAT), Globant (NYSE: GLOB), and Ascendis Pharma (NASDAQ: ASND) will do it after the market closes.

Federal Reserve Governor Adriana Kugler spoke at 7:00 a.m. ET.

Key data, including Initial Jobless Claims for November and the Producer Price Index (PPI) for October, will be released at 8:30 a.m. ET.

At 3:00 p.m. ET, Federal Reserve Chair Jerome Powell will speak, followed by New York Fed President John Williams at 4:15 p.m. ET.

Media & Entertainment

Disney’s Streaming Business Surging as Company Beats Q4 Expectations

Disney’s fiscal fourth-quarter earnings reported today are better than Wall Street’s expectations, fueled by a notable turnaround in its direct-to-consumer (DTC) streaming segment, which posted a profit for the quarter.

Adjusted earnings per share are at $1.14, surpassing analyst projections of $1.10 and up from $0.82 a year ago. Revenue has reached $22.57 billion, edging out the anticipated $22.47 billion and marking growth from last year’s $21.24 billion. The firm’s shares are rallying by more than 6% in premarket trade.

Disney’s DTC division, which encompasses Disney+, Hulu, and ESPN+, saw operating income of $321 million for the quarter ending Sept. 28, a sharp improvement from a $387 million loss in the same period last year.

This beat expectations of $203 million and underscores the sector's growing importance as traditional TV models face challenges. Disney has raised subscription prices across its streaming platforms, a strategic move in line with the industry trend of boosting margins.

However, Disney’s theme parks reported mixed results, with revenue up 1% year-over-year to $8.24 billion, but operating income fell short at $1.66 billion due to weaker international performance. The Paris Olympics and a typhoon in Shanghai were cited as factors affecting guest attendance and spending overseas.

Looking ahead, Disney expects its DTC business to generate approximately $875 million in operating income by fiscal 2025 and aims for high single-digit adjusted EPS growth that year, with double-digit growth projected through 2027. CEO Bob Iger, who plans to step down by 2026, has initiated plans for his successor, with James Gorman set to take over as chairman in early 2025.

Music and Gaming

NetEase Beats Q3 Expectations as Cloud Music Thrives, Despite Gaming Weakness

NetEase, Inc., reported better-than-expected fiscal Q3 performance today, with revenue hitting $3.73 billion, slightly above analysts' forecast of $3.65 billion, despite a 3.9% year-over-year decrease. Adjusted earnings per ADS (EPADS) are $1.67, exceeding the consensus estimate of $1.61, which have helped lift the stock 4% in premarket trading.

NetEase’s cloud music division grew 1.3% year-over-year to $284.9 million, with its gross margin improving by 560 basis points to 32.8%, highlighting strong subscriber growth and a vibrant music ecosystem. In contrast, its core gaming segment, which includes popular titles like Naraka: Bladepoint and Identity V, faced a 4.2% drop in revenue to $3 billion, and the gross margin dipped slightly to 68.8%.

However, newly launched games such as Naraka: Bladepoint Mobile and Racing Master topped charts in markets like Japan, reflecting NetEase’s continued expansion into international gaming markets.

The company also recorded growth in its education unit, Youdao, which saw a 2.2% revenue rise to $224.1 million. The segment achieved its first-ever operating profit in a third quarter, marking a shift from a loss last year.

Looking forward, NetEase remains focused on expanding its gaming and entertainment portfolio with anticipated releases like Marvel Rivals and Where Winds Meet. Despite facing market challenges, NetEase shares are rising 4.2% in premarket trading today to $79.48.

E-Commerce

JD.com Faces Consumption Slump, Boosts Marketing as Singles’ Day Approaches

Chinese e-commerce giant JD.com reported its quarterly earnings today. Revenue for the third quarter is up 5.1% year-over-year to 260.4 billion yuan ($35.95 billion), just shy of the 261.45 billion yuan expected by analysts, as consumer confidence remains hampered by an extended property crisis, rising job uncertainty, and macroeconomic pressures.

U.S.-Listed shares of JD.com are nearly 4% down in premarket trading.

While the company’s net income attributable to shareholders is up by nearly 48% to 11.7 billion yuan, efforts to drive sales led to a 25.7% year-on-year increase in marketing expenses, reaching 10 billion yuan.

This increase underscores JD.com's attempt to attract consumers during a traditionally quiet shopping period between major festivals in June and November.

JD.com’s push to compete in high-growth livestreamed e-commerce has lagged behind rivals like Alibaba, while PDD Holdings' Temu platform continues to outpace JD.com in overseas markets. In addition, despite recent government pledges to stimulate economic growth, the lack of concrete steps to boost consumer spending has weighed on sentiment.

China’s Singles' Day shopping festival, which JD.com actively participated in, extended over a 10-day longer period this year and saw a 26.6% increase in total sales across platforms. Larger household appliance sales benefited from a national 150 billion yuan trade-in subsidy, with JD.com launching programs across more than 20 provinces in support of this initiative.

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Forum Energy Technologies [FET] - Last Close: $15.29

Forum Energy Technologies' stock is up 31% in premarket trading today.

The company closed a $100 million bond issuance at 10.5% interest on Monday, maturing in 2029.

This move helps them pay off an existing loan and retire a 2025 debt. By strengthening their financial position, Forum gains flexibility for future investments and share buybacks.

Quantum Computing [QUBT] - Last Close: $2.66

Quantum Computing is rallying 30% in premarket trading after securing its first order for its TFLN (thin film lithium niobate) photonic chip foundry.

This order, placed by an Asian research and technology institute, underscores the demand for QCi’s advanced photonic chip technology, essential for applications in telecom, datacom, and quantum computing.

The order includes chip design services and multiple fabrication runs, with initial delivery expected in December 2024.

The order signals QCi’s growing influence in the photonics market, paving the way for additional orders and the upcoming launch of its new foundry.

Dlocal Limited [DLO] - Last Close: $9.04

DLocal's stock is surging 15% in premarket trading today.

The company reported better-than-expected revenue for the third quarter yesterday.

Although earnings per share (EPS) were slightly below expectations at 9 cents versus the estimated 11 cents, DLocal's quarterly sales reached $185.8 million, exceeding the expected $181.5 million.

This revenue beat indicates strong performance and growth, which has driven investor confidence and resulted in the stock's sharp increase.

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Everything Else

• Marfrig’s third-quarter profit surged with improved margins and reduced leverage.

• Unilever’s turnaround plan under CEO Hein Schumacher includes potential Dutch brand sales.

• Allegro eyes modest earnings growth in Poland as it pushes international expansion.

• Indian snack firm Haldiram’s draws interest from Blackstone, Temasek, and ADIA amid stake talks.

• Chinese tech stocks in Hong Kong face sharp declines amid U.S.-China tension and profit-taking.

• India’s central bank governor raised caution amid inflation rebound and growth slowdown.

• Burberry rallied 14% with a new strategy to counter losses.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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