Disney Is A Failure

Go back five years. Since then, Disney’s (NYSE: DIS) stock is down 11%, and the S&P 500 has risen 91%. Current CEO Bob Iger left as CEO in February 2020. He was back in November 2022, as his successor Bob Chapek was suddenly kicked out. Disney’s stock performance belongs more to Iger than to Chapek.

It’s hard to say why the five-year period has been such a disaster for shareholders. The stock did crater from exactly five years ago until June 2022. However, since then, it has moved sideways. It rallied recently, but is no better off since December 2024.

Disney supporters, and Iger supporters, can say that legacy businesses have hobbled the company. However, much of that was built by a series of major deals by Iger. He bought Pixar in 2006, Marvel in 2009, Lucasfilm in 2016, and 21st Century Fox in 2019. Each was a huge transaction. Disney’s stock performance shows that they have not continued to pay off.

In Iger’s defense, much of Disney is made up of legacy media. At the top of this list are ESPN and ABC. Both were originally TV networks. Disney has done its best, which has not been enough, to move them into a digital world. ESPN has created an online presence, but at its core, ESPN is not digital

Disney’s studio business returns have been impressive off and on. It has monetized the M&A deals Iger made. That batting average has been good. The dollar return on investment, based on when Disney bought them, for how much, and what they have brought in based on current dollars, is hard, if not impossible, to figure out accurately.

Disney’s most successful long-term business is the studios, which were primarily a gift from founder Walt Disney. Disneyland was built in 1955. Walt Disney World was completed in 1971. The model led to Tokyo Disneyland in 1983 and Disneyland Paris in 1992. These are the gifts that keep on giving. Today’s concern with them is that they are expensive for many patrons. This means traffic could be hurt. It also makes them a financial challenge in a recession.

Finally, there is the streaming business. After billions of dollars in losses, it made a profit (the division is known as Direct-to-Consumer) of $346 million in the most recent quarter. Unfortunately for Disney, it remains a second-tier competitor in an industry dominated by Netflix (NASDAQ: NFLX) and Amazon Prime Video. This won’t change. (Iger launched Disney+ in November 2019)

What does Wall St. think of Disney today? Not very much. The consensus price target among the analysts who follow Disney is $132, according to Yahoo. The stock trades at $115.

Iger says he will retire next year. The chances that the stock price will not have justified his return are small.

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