Disney, Dutch Bros Can't Stop the Stock Market's Fall After Hours

The broader stock market got a little bit closer to entering a bear market on Wednesday, with declines of between 1% and 3% for major indexes helping to send the S&P 500 (^GSPC -1.65%) down more than 18% from its recent highs. The Dow Jones Industrial Average (^DJI -1.02%) held up the best, but a big drop in the Nasdaq Composite (^IXIC 0.00%) sent that benchmark to its lowest level in more than a year and a half.

Index

Daily Percentage Change

Daily Point Change

Dow

(1.02%)

(327)

S&P 500

(1.65%)

(66)

Nasdaq

(3.18%)

(373)

Data source: Yahoo! Finance.

After the market closed, several stocks announced their latest earnings results. Yet there was little relief from some top names, as Disney (DIS -2.29%) wasn’t able to hold onto gains after telling investors about the latest state of its streaming service. Meanwhile, emerging coffee company Dutch Bros (BROS -15.76%) became the most recent casualty, falling sharply after a disappointing report.

Disney goes down more

Shares of Disney fell another 2% in after-hours trading after posting a greater than 2% drop in the regular trading session. That brought share prices to their lowest levels since the worst of the pandemic-induced bear market in March 2020, and investors don’t see a lot of reason for near-term optimism right now.

Results for the fiscal second quarter ending April 2 showed ongoing growth due to some extent to the economic reopening. Revenue was higher by 23% year over year to $19.25 billion, although Disney did say that it had to take a $1 billion reduction in order to terminate a licensing agreement for certain streaming content early. Adjusted earnings came in at $1.08 per share, up from $0.79 per share a year ago.

Disney pointed to big gains in its domestic theme park business, as well as 7.9 million new Disney+ subscribers helping to demonstrate the potential of its streaming video services. The streaming news was especially welcome in light of poorer performance from rival Netflix (NFLX -6.36%), which had much more difficulty sustaining its subscriber base.

Still, there’s a lot of uncertainty about where Disney goes from here. With the threat of economic recession giving shareholders even more to worry about, Disney stock hasn’t necessarily hit bottom just yet.

Image source: Getty Images.

No refreshment from Dutch Bros

Shares of Dutch Bros dropped more than 33% in after-hours trading. The coffee chain  released first-quarter financial results that included a revision of its 2022  outlook in an unfavorable direction.

Dutch Bros had attractive top-line growth in its latest numbers. Revenue jumped 54% to $152 million, with sales from company-operated shops climbing at an even steeper 67% rate. Much of that growth came from the 34 new stores that Dutch Bros opened, but same-shop sales climbed at a 6% pace for the quarter.

However, profits were a problem for Dutch Bros. Net losses ballooned, more than tripling to $16.3 million. Even after accounting for extraordinary items, Dutch Bros posted an adjusted net loss of $2.5 million, or $0.02 per share. The company pointed to prices for dairy products, higher minimum wages and other labor costs, and maintenance and travel expenses for the profit shortfall.

Dutch Bros now expects its same-store sales will be flat in 2022 compared to 2021, with revenue rising from $700 million to $715 million based on store count expansion. With inflationary pressures likely to keep weighing on profits, it’s unclear when Dutch Bros will turn the corner and regain its upward momentum.