Disney (DIS) stock has been a disappointment for investors, losing over 40% of its market capitalization in the past five years. The company made a strategic move by rehiring former CEO Bob Iger to lead the company once again in late 2022. Now, Iger is preparing to step down next month, passing the torch to Josh D’Amaro. Despite this transition, Iger will continue to serve as a strategic advisor until the end of the year to ensure a smooth handover.
Under Iger’s leadership, Disney underwent significant changes, especially in its streaming business. The focus shifted from growth to profitability, resulting in the segment posting an operating profit of $450 million in the first quarter of fiscal 2026. This marked a significant turnaround from the operating loss of nearly $1.5 billion in the last quarter under former CEO Bob Chapek. The company expects the streaming segment to achieve a margin of 10% for the full year, a commendable achievement.
Disney’s Experiences business, which includes its Parks division, surpassed $10 billion in revenue for the first time in the recent quarter. This segment is crucial for Disney’s profitability, and under Iger’s leadership, the company prioritized enhancing guest experience and announced a multi-billion-dollar investment to revitalize and expand its theme park offerings.
Despite some challenges, Disney’s box office performance improved during Iger’s tenure, with the company emerging as the top-grossing studio in 2024 and 2025. From a financial perspective, Disney reported revenues of $26 billion in fiscal Q1 2026, compared to $23.5 billion in the first quarter under Iger. The adjusted EPS also saw a significant increase from $0.99 to $1.63 over the same period, reflecting the success of Iger’s strategy.
However, despite the operational improvements, Disney’s stock performance has lagged behind market expectations. The stock initially surged when Iger’s return was announced but has since struggled to gain momentum. As a result, Disney’s valuations have declined over the past few years, with the stock trading at a forward P/E multiple of 16.4 times.
Disney’s strength lies in its iconic intellectual property and diverse business offerings that cater to all age groups. The company’s content library, combined with its theme parks and merchandise sales, creates a synergistic effect that drives overall growth. The recent bidding war for Warner Bros. Discovery highlights the value of intellectual property, an area where Disney excels.
In conclusion, while I remain optimistic about Disney’s long-term prospects, I have reduced my positions in the company due to better risk-reward opportunities in the tech sector. Investors should monitor any strategic shifts under D’Amaro’s leadership and assess whether it will lead to a turnaround in Disney’s stock performance. The company’s strong fundamentals and valuable IP assets position it well for future growth, but the market’s reaction remains uncertain.
