In the words of Zacks Equity Research, the second quarter 2021 results from Discovery Inc. “delivered earnings and revenue surprises” to the tune of 53.7% and 3.1%, respectively.
Yet, Discovery shares dipped below $27 a share in early trading on Tuesday and were off by 5% as of 11am Eastern. What are investors concerned about?
It is an intriguing question for Discovery and its chief executive, David Zaslav.
On January 5, Discovery Inc. stock was priced at $31.52. By March 19, it soared to $77.27 on excitement surrounding its discovery + OTT platform. That growth quickly fizzled, however, as a $35.47 finish came as soon as April 20.
Since then Discovery stock has been sputtering, and today is at its lowest point since late November 2020 — even with the big Street beat in Q2.
With advertising revenue climbing to $1.64 billion from $1.27 billion and distribution revenue accelerating to $1.37 billion from $1.23 billion, total revenue increased to $3.06 billion from $2.54 billion.
This surpassed the Zacks Consensus Estimate by 3.06%.
Net income available to Discovery Inc. climbed to $672 million ($1.01 per diluted share) from $0.40. Adjusted OIBDA came in at $1.12 billion, compared to $1.13 billion in Q2 2021.
Zacks looked at the adjusted EPS for Discovery and on that basis, the company enjoyed earnings of $0.83 per share, beating the Zacks Consensus Estimate of $0.54 per share.
“Discovery delivered very strong results this quarter as we executed well amidst a recovering global advertising market,” Zaslav said in prepared remarks. “Advertising revenue increased in every region of the globe and accelerated throughout the quarter, particularly in our International segment as revenue increased 70%.”
But, is that a sign of domestic weakness, as Q2 adjusted OIBDA for U.S. Networks slipped to $1.05 billion from $1.06 billion?
While that’s possible, investors aren’t exactly rallying around Zaslav for what was largely a swipe at Nielsen expressed during Discovery’s quarterly earnings call for investors and analysts. On the call, Zaslav assailed Nielsen for being “antiquated,” adding that “they’ve just been wrong” of late.
How frustrated is he with the nation’s dominant audience measurement and data analytics service? “Unfortunately, Nielsen is a whiff. It’s massively disappointing that Nielsen can’t get its act together … we have lost money. Everyone has lost money … It’s one thing if you have an antiquated system and then you augment it. But the antiquated system itself is unreliable.”
Zaslav also said that Discovery will look to augment its data to better compete against the likes of Google and Facebook.
