Disney Company (DIS) stock does not come cheap. It trades at a price-to-earnings ratio of around 55 times. To slow losses, the company cut jobs and let go of an executive. Netflix (NFLX) is cutting down on its content spend.
What happens to the prospects of these entertainment streaming firms?
Disney let go of Ike Perlmutter, the former chairman, and CEO who sold Marvel Entertainment to Disney. The executive will leave as part of Disney’s 7,000 job cut that saves it $5.5 billion in costs.
Disney started notifying employees affected by the workforce reduction. The second, larger round will happen this month. The savings mirrors that of Meta Platforms’ (META) year of efficiency. Disney needs to achieve cost savings to offset the growing costs of its money-losing streaming service.
Disney stock will likely climb from here. Investors are blindly buying companies that announced job cuts. They do not consider the impact on customer service, which may hurt long-term prospects. Furthermore, during cost cuts, the best employees are more motivated to look for another job.
Investors should hold DIS stock, riding the uptrend. Try to sell before speculators take profit.
The decrease in content spend is immaterial for Netflix. It can produce appealing content to keep its customer base.
