Disney (DIS) announced its earnings after yesterday’s closing bell, and its shares have gained more than 6% in after-hours trading. Despite a terrible quarter, marked by the coronavirus crisis, investors look at the bright side and consider that the worst is over.

After all, Disney’s theme parks were closed most of the period, having a strong impact on the bottom line.

Disney Q3 Fiscal Year Earnings

In the last few years, Disney consistently beat earnings, but this time investors expected no such thing. For instance, Disney beat revenue estimates by over 75% in Q2 of 2018, but expectations were nowhere near this going into the earnings call.

As it turned out, for the fiscal quarter that ended March 28, the EPS from continuing operations declined by over 98% when compared with the previous quarter. However, it was not so much about beating the earnings this quarter, but about the future outlook.

The numbers from Disneyland Hong Kong and the Shanghai Disney Resort were also poor, and negatively affected the net income from continuing operations. Cash flow from operations and, more importantly, free cash flow declined significantly.

All in all, with the exception of revenues, which rose by 21% when compared with March 30, 2019, all other financial metrics declined significantly.

At this chapter, investors seem to have high hopes in Disney’s business model. Disney trades sharply higher in premarket trading. As a result it was just upgraded to “buy” from “neutral” at Guggenheim.

Among other things, Disney’s forward-looking statement revealed its intentions to launch a new international streaming platform. Named Star, the streaming platform will hold all Disney content, with no third-parties.

To sum up, Disney’s results are a mix bag of bad data already priced in and optimistic expectations about online streaming and future services. As management suggested in the earnings call, the future performance depends on the virus’s impact. Things like health concerns, future outbreaks, changes in domestic and global economic conditions, represent risks to consider moving forward.

The theme parks seem to have been affected the most by the pandemic. If Disney manages to recover parts of that income stream, while increasing the portion coming from online streaming, it will have no issues beating future expectations.

So far, investors believe in its ability to do so. If only we judge by the initial market’s reaction.