Disney Eyes 2026 Recovery on Streaming Gains, Parks Strength Despite Linear TV Decline

Disney's stock took a sharp hit on November 13th when the market digested the company's fiscal fourth-quarter results and decided they weren't worth the price. The shares dropped nearly 8 percent in a single day, slipping below their 200-day moving average—a technical marker that traders watch closely. It's a familiar pattern for the entertainment giant: Disney has underperformed the broader S&P 500 in three of the last four years, and 2025 looks set to join that list.

The earnings themselves told a complicated story. Revenue came in at $22.46 billion, down slightly from the same quarter the year before and missing the $22.75 billion that Wall Street had penciled in. Adjusted earnings per share fell 3 percent to $1.11, though that number did beat expectations. The company faced some legitimate headwinds—it had a much stronger slate of theatrical releases in the prior year and had benefited from political advertising spending ahead of the 2024 presidential election. But even when you account for those tougher comparisons, the results landed below the bar. Announcements of higher dividends and expanded share buybacks couldn't lift the mood.

What emerges from Disney's recent performance is a company operating as three distinct businesses, each with its own trajectory. The theme parks—the Experiences segment—continue to perform solidly. Bookings are growing, and customers are spending more per visit. Despite worries about stricter immigration policies, a potential economic slowdown, and the opening of Comcast's new Epic Universe park in Florida, Disney's domestic and international parks have held their ground. This segment functions as the company's cash flow engine, the reliable profit generator that funds everything else.

Streaming has become the second pillar, and it's a remarkable turnaround story. When Bob Iger returned as CEO in late 2022, the streaming business was hemorrhaging roughly $4 billion annually. By the fourth quarter of this year, it generated $352 million in operating income. For the full fiscal year, that figure reached $1.3 billion. The path to profitability is now visible, and margins should continue expanding through 2026 and beyond.

The third piece—linear television—is in structural decline. The company has previously faced speculation that it might exit the business entirely, but Disney has firmly rejected that idea, arguing that traditional TV complements its streaming content strategy. Still, this segment will be a drag on overall earnings growth for the foreseeable future.

Then there's the movie business, which swings wildly. Last year was exceptional: Inside Out 2 became the fourth highest-grossing animated film ever and the biggest box office success of 2024, while Moana 2 also performed strongly. This year, however, titles like Snow White and Tron: Ares disappointed. The stakes here extend beyond box office receipts. Successful films feed Disney's streaming library, making the service more attractive to subscribers. They also deepen the emotional connection between Disney and its audience, which translates into higher attendance at the theme parks.

Looking ahead to 2026, there are reasons for cautious optimism. Disney has guided for double-digit earnings growth, though the company warns that the year will be back-loaded—meaning the first quarter will still face tough comparisons. The movie slate looks stronger, with Avatar: Fire and Ash, Toy Story 5, and a live-action Moana scheduled for release. The parks should continue their steady performance. Streaming margins will keep improving.

But Disney faces real challenges. The company needs to resolve a YouTube partnership dispute. Linear TV's decline will persist as a headwind. CEO succession looms, as Iger has indicated he will step down when his contract expires next year. And artificial intelligence presents an uncertain threat to a company whose core asset is intellectual property—though Disney says it's working with AI firms to protect its content.

At a forward price-to-earnings multiple of 17.7 times, the risk-reward proposition looks reasonable. If the broader market doesn't crater, Disney stock could deliver solid double-digit returns in 2026. The question is whether the company can execute on its streaming and parks strength while managing the slow fade of linear television.