With former CEO Robert Iger’s unexpected return, Walt Disney Co. shares rallied. Analysts believe the comeback will bring a steadying touch after a rocky stretch.
On Sunday night, Disney’s board of directors fired CEO Bob Chapek and replaced him with former CEO Robert Iger. Iger left the company at the end of last year. The surprise comeback was a response to Burbank, Calif.-based Disney facing multiple issues. These include less-than-anticipated financial outcomes in the fiscal fourth quarter centering on its streaming shortfalls.
After resigning as CEO in February 2020 and shifting to executive chairman, Mr. Iger had a 15-year success story with Disney. During his reign, the company achieved unprecedented profits. The stock price increased by more than five times, and its annual net profit increased by more than four times.
Investors are now skeptical of Chapek, Disney’s previous CEO, who was sacked and had projected profit by late 2024. The streaming division grew losses in the most recent quarter to $1.47 billion, up more than 200% compared with a year ago. Yet, the number of subscribers increased to 164.2 million. M&A is also available through the streaming business. Disney already owns two-thirds of Hulu and anticipates buying out minority owner Comcast Corp.
In addition, Scarlett Johansson, a Marvel movie actress who helped boost billions of dollars at the box office, also filed a lawsuit against Disney in September 2021. She claimed that because the firm chose to release her film Black Widow on the Disney+ streaming service during the COVID pandemic, she lost out on a payday linked to ticket sales. The matter was resolved before the corporation enraged key constituencies by being labeled “sexist.”
Two prominent activist investors who rushed in following Iger’s departure might also act as additional pressure on Iger. But despite challenges, Disney stockholders believe the firm is again in stable hands, and rising stocks are proof of that.
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