Walt Disney Co. (NYSE: DIS) stunned the entertainment media and investment markets this week when it announced the Bob Iger would be stepping down from his position as CEO.
Iger has led the company since 2005 and has transformed it from a prestigious but underperforming studio, into a global multimedia and cultural phenomenon. Not only has Iger delivered the goods with impressive and profitable franchises like Marvel and Star Wars, but he has also helped to create strong returns for investors.
Iger led the acquisition of Pixar Animation, Lucasfilm, Marvel Entertainment, National Geographic, Fox, and even the streaming service Hulu. Most recently, Iger oversaw the development and release of Disney+, a runaway streaming success that has the potential to compete with Netflix in the coming years.
Iger, who is now 69 years old, has postponed his retirement several times in the last decade. He was intending to lead Disney until at least 2021 when his current contract expires. While he will step down as CEO, he will remain an essential part of the company as Executive Chairman.
When explaining his reasons for leaving his post, Iger said that “I believe it was the right time to transition to a new CEO.”
How Do Investors Feel About Disney Change?
Disney is one of the most promising media stocks today, due to its hugely successful film franchises and continued box office blockbusters. The Disney+ streaming platform has also excited investors, with the potential for a huge spike in revenue in the years to come.
The company is valued at almost $230 billion today. Throughout Iger’s tenure, the stock price has more than quadrupled.
Bob Chapek will be taking over Iger’s duties, but analysts don’t expect any major change in Disney’s strategy. The company is increasing its focus on streaming platforms, which will eliminate its reliance on other content distributors. It has a controlling stake in Hulu and ESPN+, along with the aforementioned Disney+ platform. This will give the company broad international reach beyond the box office, allowing it to monetize its properties without middlemen.
The stock has underperformed this year and is currently down -14.71% year to date. However, it’s impossible to gauge the investor response at this time, due to this week’s stock volatility related to the Coronavirus outbreak. The market suffered one of its biggest two-day slides in history on Monday and Tuesday, and Disney was not immune to this.
For the meanwhile, the direction of the company hasn’t changed, and recent performance should keep investors confident throughout this year. Revenue has increased for five consecutive years and was up an impressive 16.67% at the end of the 2019 fiscal year.
New leadership can bring uncertainty, but the company’s momentum looks secure, at least for the mid-term future.
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