Disney Shares Jump 9% After Bob Iger Returns As CEO — Should You Buy?

Mandatory Credit: Photo by Vianney Le Caer/Invision/AP/Shutterstock (12635262ck)Bob Iger poses for photographers at the World premiere of the film 'The King's Man' in LondonThe King's Man Premiere, London, United Kingdom - 06 Dec 2021.
Vianney Le Caer/Invision/AP/Shutterstock / Vianney Le Caer/Invision/AP/Shutterstock

In a big plot twist at Disney, on Nov. 21 the media giant announced that they had reinstated former CEO Bob Iger. Iger had previously left the company in 2020 after a hugely successful 15-year run, and the news of his return sent Disney stock skyrocketing by 9%, per The New York Times. Given this development, is now the time to invest in the company?

The future of Disney looks good with Iger at the helm. In his decade-plus stint as CEO (part of 50 years in total with the company), Iger was instrumental in expanding the Disney empire. Because of his strategic moves, Iger is regarded by some as one of the most successful business heads in recent memory.

Iger inked deals to procure giant entertainment divisions like Pixar, Lucasfilm and Marvel and helped steer a $71 billion acquisition of 21st Century Fox. And most notably, Iger was behind the launch of popular streaming platform Disney+ in 2019, per CNN. In its first year alone, it was worth an estimated $100 billion, as reported by CNBC.

Even so, according to Oak View Law Group attorney and finance writer Lyle Solomon, “Investors should be wary of buying [Disney stock] DIS right now.” As Solomon shared, the S&P 500 is still in a bear market and may worsen in 2023 — especially if we head into a full-blown recession, which has put a damper on investing in general as experts suggest being more cautious with contributions.

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Iger To Replace Chapek as Disney CEO

Iger takes over for his hand-appointed replacement, Bob Chapek, who was fired Nov. 20 by Disney’s board after a series of missteps that contributed to Disney stock tumbling by 36% this year.

That includes navigating a breach of contract lawsuit with “Black Widow” star Scarlett Johansson, who claimed more money was owed to her for her role after mistakes allegedly made by Disney reduced the film’s box office potential. The Hollywood Reporter noted it was a landmark case that had far-reaching implications for the entire entertainment industry.

More public-facing was the controversy stirred up, under Chapek’s tenure, when Disney remained silent in the face of Gov. Ron DeSantis’ “Parental Rights in Education” bill (which critics dubbed the “Don’t Say Gay” bill) introduced in the company’s home state of Florida, per CNN. Chapek spent weeks doing damage control. On the flipside, Iger had made public comments condemning the bill.

Disney’s Ouster of Chapek Prompts Surprise

Disney’s move to oust Chapek came as a shock to many in the industry, considering he had just renewed his contract through 2025, per CNN. Instead, Iger agreed to return for a two-year changeover period to bring Disney back to a positive place, with the article noting Iger’s appointment came with “a mandate from the Board to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term.”

Though Iger had recommended Chapek for his replacement, Disney remains hopeful he can find the right successor to take over for him when his two-year term ends in late 2024, when Iger will be 73.

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Iger released a statement on the evening of Nov. 20, noting: “I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO. Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe — most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration.”

While Disney stock looks strong with Iger reclaiming the reins (and may be attractive to investors), The New York Times cautioned that it’s still “off by more than 40% this year” — and is “on its worst run since at least the 1970s,” per Bloomberg. Under Chapek’s tenure, Disney stock took a huge dive of 22%, erasing an estimated $35 billion in market capitalization. While there’s much the company needs to do to catch up to previous market domination, now could be the time to invest at under-market rates while Iger settles back in for round two.

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