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Discover why Bob Iger can bring back the Disney magic

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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Shares highlighted the compelling case for buying Walt Disney (DIS:NYSE) in January 2021 at $171.82, but after generating early gains, the shares have drifted lower to leave the shares 43% on our entry point.
But there is hope at hand, as former boss Bob Iger is back as CEO for the next two years and customers, staff and shareholders believe he can bring some of the magic back to the ‘House of Mouse’, since Disney’s shares did exceptionally well during his first period in the hot seat.
WHAT HAS HAPPENED SINCE WE SAID BUY?
Disney has parted ways with CEO Bob Chapek after a lacklustre tenure since his February 2020 appointment. Staff morale appears to have got worse, and customers are angry at large price hikes and constant disruption to rides in its theme parks. Chapek also riled those working for the company by getting rid of well-respected TV content executive Peter Rice.
But it was the recent fourth quarter results (8 November) that proved the final straw for Chapek, as the numbers fell short of expectations for sales and profits. Direct-to-consumer revenues for the quarter increased 8% to $4.9 billion, yet the operating loss increased by $0.8 billion to $1.5 billion due to a higher loss at Disney+ and disappointing results at Hulu, partially offset by improved results at ESPN+.
WHAT SHOULD INVESTORS DO NOW?
Disney is worth sticking with for the long run. Iger was the driving force behind the launch of the streaming strategy in 2019 and he should reassure investors that the streaming business is on the right track.
We’d also expect Iger to devote attention to the profitability of the domestic parks, a very important part of the Disney investment case alongside the streaming service.
However, not everyone is welcoming Iger back with open arms. The Wall Street Journal has reported that activist investor Nelson Peltz opposes his rehiring and wants a seat at the board to push for more cost cuts.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
The value of your investments can go down as well as up and you may get back less than you originally invested. We don't offer advice, so it's important you understand the risks, if you're unsure please consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. Past performance is not a guide to future performance and some investments need to be held for the long term.
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