Disney stock on track to close at lowest level since October 2014
Disney (DIS) shares are trading at their lowest level in over three years and are on track to close at their lowest point in nearly nine years as the future of the media giant remains uncertain.
The stock, currently hovering at just under $83 a share, has not closed below $84 since October 17, 2014, which even includes the height of the pandemic. Shares have also underperformed the benchmark S&P 500, declining nearly 5% year-to-date compared to the S&P’s roughly 15% gain.
The moves come amid a slew of challenges facing the entertainment giant. The company’s parks business is slowing. Its linear TV division is declining, and so are subscribers to its flagship streaming service Disney+. Not to mention the media giant seems to have lagged competitors at the box office.
Some on Wall Street are advocating for a break-up, suggesting Disney should consider unloading unprofitable or “non-core” assets — something even CEO Bob Iger hinted at last month.
“Given the thinking you’ve done about the future of Disney, why doesn’t it make sense to create two Disney companies: one focused on parks, Disney+ and then the studio IP that drives that flywheel, and then one on everything else? So why not make a clean break?” MoffettNathanson analyst Michael Nathanson pressed CEO Bob Iger on the company’s earnings call on August 9.
Nathanson later clarified that “everything else” would include Disney’s linear networks, ESPN+, Hulu SVOD, Hulu Live TV and Disney+ Hotstar.
“I’m not going to comment on the future structure of the company or the asset makeup of the company,” Iger said in response. “As I’ve said, we’re looking at strategic options both for ESPN and for the linear networks, obviously addressing all of the challenges that those businesses are facing.”
That uncertainty has led to both internal and external turmoil as Disney has yet to name a permanent CFO with Iger’s CEO contract set to expire at the end of 2026.
“I’m not in the camp that says that Disney really needs to split up,” Bank of America analyst Jessica Reif-Ehrlich told Yahoo Finance, maintaining divesting likely won’t be enough to solve Disney’s myriad of problems. “Having said that, I think all options, and Bob Iger has made this very clear, all options are on the table.
Source: finance.yahoo.com