Disney stock slides after Q1 results, costs rise, and CEO transition nears

Disney stock fell sharply in early trading Tuesday, Feb. 3, 2026, as investors digested the company’s fiscal first-quarter results and looked ahead to a looming leadership handoff. The selloff came even as Disney posted revenue growth and improving profitability in streaming, underscoring how sensitive the shares remain to cost trends and long-term guidance.

As of 9:16 a.m. ET, Disney shares were trading around $104.45, down about $8.25 (roughly 7%) from the prior close.

What drove the drop today

The immediate trigger was the company’s quarterly update and the market’s reaction to what it implied for 2026. Disney’s revenue rose to about $26 billion for the quarter, but net income slipped to roughly $2.48 billion from about $2.6 billion a year earlier, leaving investors focused on margin pressure rather than top-line growth.

Disney highlighted higher production spending tied to upcoming major releases, and the quarter included a notable loss linked to a distribution dispute in its TV ecosystem. Those items, combined with unchanged full-year messaging, appeared to outweigh the more encouraging parts of the report.

The quarter: strong revenue, tougher margins

The report showed a company still capable of growing, but not without friction. Disney pointed to a quarter in which its businesses collectively expanded, yet costs climbed in ways that pinched bottom-line performance.

A key point for investors was that even a solid revenue quarter can translate into a weak stock reaction if operating leverage is not improving fast enough. With Disney carrying a large content pipeline and substantial fixed costs across entertainment and experiences, the market tends to reward clearer margin expansion and punish signs that spending is running ahead of earnings power.

Streaming improves, but expectations are higher

Disney’s direct-to-consumer operation produced a meaningful jump in operating income, helped by pricing actions and bundling strategy. Streaming has become the center of the company’s “show-me” story: investors want proof that subscriber scale can translate into durable profits without sacrificing the brand’s long-term creative engine.

The tension is that progress in streaming profitability can be offset—at least in the market’s short-term view—by rising content costs elsewhere, slower growth in legacy channels, or uncertainty around the path to sustained double-digit margins. Tuesday’s move suggests investors saw enough risk in the balance of those factors to de-rate the stock for now.

Parks and experiences remain the financial anchor

Disney’s experiences segment delivered another strong quarter, with revenue around $10 billion, reinforcing the idea that parks, resorts, cruise, and consumer products remain the company’s most consistent profit engine. That matters because experiences often fund the rest of the ecosystem: franchise storytelling helps drive parks attendance and merchandise, while parks cash flow can support investment in content.

Still, investors can turn cautious quickly if they sense demand is normalizing after years of post-pandemic pricing power, or if international visitation and travel trends soften. The market’s reaction suggests that even a record quarter in experiences may not be enough to offset broader concerns about cost discipline and forward-looking growth.

Leadership change adds another layer of uncertainty

Disney is also moving toward a major leadership transition, with the company set to hand the CEO role to Josh D’Amaro on March 18, 2026. While a defined date can reduce uncertainty over time, the period right before a handoff often raises questions about strategy continuity, succession depth, and how quickly the next CEO will adjust priorities.

For investors, the key is not just who is in charge, but how capital is allocated—especially across big-ticket parks investments, content spending, and efforts to reshape the company’s TV and streaming economics.

What investors watch next

After a drop of this size, attention typically shifts to a few near-term signposts:

• Whether Disney reiterates or refines full-year targets in upcoming communications

• Evidence that higher production costs are temporary rather than structural

• Continued streaming profit expansion without a visible hit to engagement or churn

• Any signals about the post-transition leadership team and operating priorities

For now, Tuesday’s slide reflects a market that wants cleaner proof that revenue growth is translating into steadier earnings momentum—while Disney navigates both cost pressures and a changing executive era.

Sources consulted: The Walt Disney Company; Reuters; Barron’s; MarketWatch