Disney Share Price: Why Did the Return of Iger As CEO Boost Share Price?

Disney has re-hired Robert A. Iger as CEO in place of Bob Chapek. Iger served the company for more than four decades with 15 years of it being as CEO. He left the company in 2020 but stayed on as executive chairman through 2021.

Disney Share Price History

Former Disney CEO Chapek’s Tenure

Chapek took over as the CEO of the company in February 2020, just before the pandemic started.

And the “House of the Mouse” has had a rough ride since then. The stock is down 31% since Chapek took over. During this tumultuous period, the company has been mired in controversies and faced numerous economic headwinds.

Earlier in 2022, Disney faced the wrath of the public when it hiked prices across its parks amid an environment of high inflation and economic downturn globally. Further, the company got embroiled in a controversy after its perceived silence on Florida’s "Don't Say Gay" bill which bars discussions of gender and sexuality in classrooms.

Amid its perception taking a battering due to these controversies, the financials of the company also took a nosedive in its latest results for the fourth quarter.

Walt Disney's Financial Performance

• Disney’s revenues witnessed year-over-year growth of 9%. However, its earnings per share (EPS) of $0.09 remained unchanged from the previous year. 
• Specifically, its key media and entertainment segment saw a revenue decline of 3% from the prior year with a fall of 91% in the operating income for the same. This can be somewhat attributed to the 9% yearly decline witnessed in the average monthly revenue per paid subscriber from $0.64 to $0.58. 
• The financials were also under pressure due to the more than doubling of the operating loss in the Direct-to-Consumer segment from $630 million in the previous year to $1.47 billion.

Unsurprisingly, the stock tanked 13% in a single day after the earnings report to reach a 52-week low of $86.75.

Return of Iger As Disney's CEO

Taking all this into account, Disney has brought back Robert A. “Bob” Iger. The older “Bob” is a Disney veteran and has steered the company through many-a-troubled times over the years. The board has mandated a tenure of two years for Iger during which he will steer the company strategically and also look for a suitable successor. 

Notably, during Iger’s period as CEO, Disney completed the notable acquisitions of Pixar (2006), Marvel (2009), Lucasfilm (2012), and 21st Century Fox (2019). Further, within this period the company’s share price jumped more than 300%.

Although, just a few months ago Disney extended the contract of Chapek till July 2025, the controversies and the dismal financial performance which followed resulted in the company pulling the plug from Chapek. Now, with Bob Iger back at the helm, at least temporarily, the company can look forward to negating the headwinds it has encountered recently and consequently improving its financials too with a new strategic vision.

Disney Share Price: Brokerage Radar

Analyst price targets and recommendations for Disney have been a mixed bag.

Guggenheim has upgraded the stock from “Neutral” to “Buy” and has raised the price target from $110 to $145.

However, J.P. Morgan has lowered the price target of the stock from $145 to $135, although it has maintained its “Overweight” rating on the company.

Similarly, Credit Suisse has lowered the price target from $157 to $126 but has maintained its “Outperform” rating on the stock. 

This is not an investment advisory. The blog is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. The performance and returns of any investment portfolio can neither be predicted nor guaranteed.