Stocks Of Disney Rise Following The Return Of Bob Iger As CEO

(CTN News) – On Monday morning, Disney’s shares rose nearly 9% in premarket trading as investors rallied behind Bob Iger’s reinstallation as CEO of the Magic Kingdom.

A surprising announcement was made on Sunday by board of directors that Iger would return as CEO for a two-year term.

Iger previously led the company as CEO from 2005 to 25. A series of missteps during Chapek’s tenure at the media conglomerate led to his ouster. Iger replaced him.

“There is magic again,” MoffettNathanson analyst Michael Nathanson wrote in a note Monday, upgrading Disney’s stock from “market perform” to “outperform” and setting a 12-month price target of $120 per share.

Nathanson wrote, “We applaud Disney’s board for taking on this challenge.” “We have never hidden our admiration for Mr. Iger and the job he did in establishing Disney as the global leader it is today.”

According to the financial analyst, the firm has not recommended purchasing Disney shares since May 2020 “for a number of reasons, including concern that former CEO Bob Chapek has become wedded to a streaming strategy that does not make sense in today’s digital world.”

The value of Disney stock was battered earlier this month when the media conglomerate missed Wall Street expectations for the September quarter and reported that direct-to-streaming losses and linear TV cord-cutting declines for fiscal year 2023 would be higher than expected.

On Nov. 7, Disney shares fell to their lowest level in over two years, closing at $86.75 per share. It was the lowest closing price for shares since March 20, 2020, when the COVID pandemic began to cause a dramatic market sell-off. Year-to-date, the stock has fallen 41%.

Upon bringing back Iger as CEO, Disney’s board said the executive would be responsible for setting the strategic direction for renewed growth. He would also collaborate with the board on the development of a successor to lead the company after he leaves.

“I am extremely optimistic about the future of this thriving company, and I am delighted that the board has asked me to return as CEO,” Iger said.

Iger led  acquisition of Pixar, Marvel, Lucasfilm, and 21st Century Fox for more than 15 years, and increased the company’s market capitalization fivefold.

As executive chairman of Disney from December 2021 until his departure, Iger was responsible for the company’s creative endeavors. The company’s robust pipeline of content is testament to his vision and leadership, according to the company’s board.

It was early in Iger’s tenure that Disney’s film division suffered large losses due to “releases of expensive general entertainment that failed,” which he turned around after acquiring Marvel, Lucasfilm and Pixar, Nathanson explained.

“We would hope and expect that Mr. Iger examines the investment plans for Disney+ and refocuses the company’s investments on franchise strengths rather than general entertainment content,” the analyst stated.

The author writes that Disney+ – and Disney’s shareholders – would probably benefit from fewer end-state subscribers who are willing to pay high [revenue per subscriber], which would result in much higher margins.

Nathanson further predicts that Iger will implement “deep cost-cutting at ESPN, including a review of all upcoming sports rights in order to more adroitly adapt to these new times.”

How long was Bob Iger CEO of Disney?

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