Disney (NYSE: DIS) is up over 9% in pre-market trading hours. The news that Bob Iger, its previous CEO, is back triggered a sharp rally after the company missed the estimates on the last quarterly earnings.
After the announcement, Disney’s stock price regained the $100/share level. Iger will replace Bob Chapek, his handpicked successor, at the helm of Disney.
The COVID-19 pandemic pushed the company close to the brink. By bringing back Iger, Disney plans to boost investors’ confidence and reverse the downward trend in the stock price.
As a CEO of a publicly listed company, the aim is to maximize shareholders’ wealth. During Iger’s time as CEO, Disney’s market value rose by $200 billion.
In 2019, under his leadership, Disney+ was launched. As it turned out, during the pandemic, it was one of the few business areas with a positive cash flow.
In 2006 Disney bought Pixar for $7.4 billion – another strategic move by Iger. Also, it bought Lucasfilm for $4 billion in 2012.
Disney suffered during the pandemic as its theme parks were shut down. Moreover, competition from online streaming rivals such as Netflix forced the company to adapt to the new times.
Yet, despite all the challenges, Disney’s market capitalization is $167.36 billion, much higher than Netflix’s ($128.16 billion) or Warner Bros. Discovery ($26.15 billion). The big problem for Disney’s shareholders is the gross profit margin, some -83.73% below the sector median.
Disney’s stock price declined by -41.44% YTD, with the overall market. The announcement of Iger’s return might turn out to be just the right type of news that boosts confidence after a year of stock market losses.
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