Disney stock (NYSE: DIS) slumped over 2.5% yesterday and is now at the lowest level in eight years. Last month, the company replaced Bob Chapek and appointed Bob Iger as the CEO. Can he turn around DIS’s fortunes in 2023?

With a YTD loss of 45.7%, Disney is on track for the worst year since 1974. The stock has underperformed the markets by a wide margin this year. Streaming rival Netflix too has crashed in 2022 and is down 54%. However, while Netflix stock has rebounded from its 2022 lows, Disney has slumped to new lows.

Notably, Disney stock jumped last month on news that Iger would take over the reins from Chapek. Iger has his task cut out as Disney battles perennial losses in its DTC business while some of the recent movie releases have failed to live up to expectations.

Disney’s DTC (direct-to-consumer) business lost $1.47 billion in the September quarter as the streaming business continued to post losses.

Disney has said multiple times that its streaming business will become profitable in the fiscal year 2024. It reiterated the views in the fiscal fourth-quarter earnings call.

Chapek said during that quarter’s earnings call that the operating losses at the DTC business have “peaked” and would decline going forward.

Bob Chapek Wants Disney to Focus on Profits

Iger meanwhile has indicated that unlike his predecessor he wants Disney to prioritize profits over subscriber growth. To be sure, the company has scaled up its streaming subscriber base quite fast and at the end of September, Disney+ had a total of 164.2 million subscribers.

After accounting for its other streaming platforms, the company had 235 million total subscribers which were ahead of Netflix. However, while Netflix is profitable, Disney’s streaming business has been a drain on its earnings.

Disney has also started offering its ad-supported streaming tier this month. Netflix too started offering an ad-supported tier a month ahead of Disney but reports suggest that the company refunded money to advertisers after it could not meet viewership targets.

Evercore ISI meanwhile is bullish on Netflix stock and has added it to its top ideas for 2023. There is a guide on how beginners can buy Netflix stock.

“Avatar’s” Collections Cross $1 Billion but Fall Behind Estimates

While “Avatar’s” collections have surpassed $1 billion globally, the popular franchise has disappointed with its performance, especially in China where the collections are just around $100 million.

James Cameron had previously said that the sequel would need to make over $2 billion to be considered profitable. However, neither Cameron nor Disney have publicly stated the movie’s production budget.

Notably, Iger was Disney’s CEO before he passed the baton to Chapek. Under his watch, Disney completed several acquisitions and also started its theme park in Shanghai. Wall Street analysts are meanwhile mixed on whether Iger can turn around the company.

Can Iger Turn Around Disney? Wall Street is Divided

After Iger returned as Disney’s CEO, MoffettNathanson upgraded DIS stock to outperform and raised its target price to $120. Needham also viewed Iger’s return as a positive for DIS stock but maintained its hold rating. Morgan Stanley also said that Iger can turn around Disney.

Cowen meanwhile is not convinced that Iger’s return would help the company in a major way.

Wells Fargo saw Iger’s return as a positive though and opined that Disney might spin off ESPN and ABC.

All said, most analysts agree that it won’t be easy for Iger to make Disney’s streaming business profitable in a hurry. However, given his previous track record of being profit-focused, Wall Street is mostly positive about his return as DIS CEO.

Related stock news and analysis

Wall Street Memes (WSM) - Newest Meme Coin

Our Rating

Wall Street Memes
  • Community of 1 Million Followers
  • Experienced NFT Project Founders
  • Listed On OKX
  • Staking Rewards
Wall Street Memes