Wall Street says you can go home again, as shares of Walt Disney Co. spiked Monday on the news that Bob Iger is returning as chief executive of the media and entertainment company.
The stock closed up more than 6%, trading at $97.58 a share. The closing price on Friday was $91.89.
Iger was named chief executive late Sunday night, replacing his successor, Bob Chapek, whose exit was partly blamed on the company’s most recent lackluster earnings report. Disney recently announced cost cuts, including a hiring freeze.
Media analyst Michael Nathanson praised the return of Iger, raising his rating on the Disney stock to outperform (buy).
Wall Street says you can go home again, as shares of Walt Disney Co. spiked Monday on the news that Bob Iger is returning as chief executive of the media and entertainment company.
Early trading had the stock up nearly 7%, trading near $98 a share. The closing price on Friday was $91.89.
Iger was named chief executive late Sunday night, replacing his successor, Bob Chapek, whose exit was partly blamed on the company’s most recent lackluster earnings report. Disney recently announced cost cuts, including a hiring freeze.
Media analyst Michael Nathanson praised the return of Iger, raising his rating on the Disney stock to outperform (buy).
Nathanson said Chapek “was not willing to deal with reality, which is what happened in the [analyst] call and it all blew up in his face.” But he added that Iger will have some challenges the second time around at Disney.
“It’s going to be a different regime than when he first started,” Nathanson said. “He has to cut things. He has to look at the portfolio and really make some hard decisions.”
Disney announced last week it had lost $1.5 billion in its last financial quarter on its streaming services, which have added subscribers without approaching profitability.
Chapek declared that the fourth quarter represented the peak of Disney’s losses in streaming as the company prepared to raise prices and add a Disney+ tier with advertising. Just days later, Chapek sent a memo to Disney leadership calling for cost-cutting measures, including layoffs and a hiring freeze.
CNBC commentator and “Mad Money” host Jim Cramer was not impressed, calling for Chapek’s firing during his Nov. 9 appearances on the network. Video clips were shown when CNBC covered the story on Monday.
Cramer compared Chapek to an NFL coach who “loses too many games.”
Cramer was especially critical of the way Chapek handled the poor earnings performance on the earnings call with financial analysts.
“He made it sound like it was a four-star quarter,” Cramer said. “Delusional.”
Cramer’s calls for Chapek to be fired wasn’t the reason that he was ousted, said one longtime Disney observer. But Cramer was able to crystalize the market’s impatience with Chapek, and helped frame the issue for the board, the source said.
Disney’s stock has dropped more than 40% in 2022 after starting the year at nearly $160 a share.
The company is currently valued at $164 billion. Over his career as chief executive, Iger, 71, grew the company’s market capitalization from $48 billion to $257 billion.
