Walt Disney Co. shares plummet as it FAILS to hit subscriber target for Disney+ despite it finally turning a profit

Disney stock dove more than nine percent Tuesday after the entertainment behemoth fell short on its profit outlook and Disney+ subscriber growth.

That's despite Disney+ becoming profitable for the first time since its launch in November 2019, a huge milestone since streaming platforms - except Netflix - have long been struggling to convert paying members into actual profit.

In Tuesday's earnings report, Disney raised its expectations of full-year earnings growth to 25 percent, when analysts were hoping for 25.5 percent. 

And even though Disney+ subscribers totaled 153.6 million in its second quarter ending March 30 - more than Paramount+ and Peacock combined - investors wanted to see more than 155 million by this point.

Disney stock fell off a cliff Tuesday despite a pretty resounding earnings beat and its announcement that Disney+ was profitable for the first time in its history

Cinderella Castle at the Magic Kingdom, at Walt Disney World, in Lake Buena Vista, Florida, on April 3, 2023

Investors in the streaming and theme park giant still have a lot to be happy about though, considering that Disney's earnings per share and revenue both beat analyst expectations.

Disney CFO Hugh Johnston said the quarter was 'a strong one for us,' adding that Disney+ and Hulu (which Disney owns) reported a profit of $47 million.

'We got profitable earlier than we expected as the costs came in better than expected,' Johnston said in an interview on Bloomberg TV. 

This is the fourth quarter in a row that Disney outperformed Wall Street's predictions with chief executive Bob Iger at the helm, who succeeded former CEO Bob Chapek in November 2022.

Iger had previously served as Disney's CEO from 2005 to 2020 when his contract expired and was called in to right the sinking ship from Chapek's hands.

After Chapek took over in February 2020, Disney dropped about 40% within two months. It then jumped to its all time high of $197 in March 2021, before plummeting 52 percent, according to Forbes.

Returning Disney CEO Bob Iger (left) was reportedly frustrated with his successor, Bob Chapek's (right), leadership, callling him 'incompetent' 

Iger has presided over a period of steady growth for Disney, after leading the company through a period of triple digit expansion from 2005 to 2020

Last year, Ant-Man and the Wasp: Quantumania became the rare Marvel failure

The Marvels also scored 62 percent on Rotten Tomatoes, but only made $206 million against a break-even target of $439.6 million

Iger has reportedly said that Chapek was 'incompetent' and doing a 'terrible job.'

The Chapek era appears to be long behind Disney, and while the stock hasn't broached its all-time-high, shares have been consistently up since Iger assumed control approximately a year and a half ago.

Although Disney has successfully navigated itself out of a troubled time during the pandemic, it faced another set of problems caused by the 118-day SAG-AFTRA strike that ended in November 2023.

Disney quietly killed multiple films recently, as many of its recent theatrical releases flopped at the box office, including The Marvels and the Ant-Man sequel last year. 

Iger denied that 'superhero fatigue' is behind these movies failing, particularly because films like Guardians of the Galaxy last May Black Panther 2 in November 2022 both made healthy profits in the same time span.

'It's not audience fatigue. They want great films. And if you build it great, they will come,' Iger said in March 2024.