Disney shares jump after Bob Iger returns as CEO

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 Craig Moffett praised the return of Iger, raising his rating on the Disney stock to outperform (buy).

“He stuck with a streaming vision that was backwards that was driven by subscriber growth and not profitability,” Nathanson told CNBC on Monday.

Iger ran Disney from 2005 to 2020, then served as the company’s executive chairman through 2021 when he retired. Under his new deal, he will be chief executive officer for the next two years and will be tasked with finding a successor.

Moffett said Iger would be up to the task of making tough decisions needed to deal with the ongoing decline of its pay TV business due to cord cutting, and putting its streaming services on a path for profitability.

“What I like about Bob Iger: He’s been direct, he’s been honest,” Nathanson added. “He’ll make tough choices. There are tough choices here as far as the assets they have and the investment they need.”

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.

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.