Hey, Josh! I can call you that, right? It’s Wednesday. Your life as Walt Disney‘s (NYSE: DIS) new CEO begins today at your company’s annual shareholder meeting. This is awkward. I should’ve said our company’s annual shareholder meeting.
As a shareholder for decades — and possibly the only longtime annual pass-holder who has never run into you at Disney World or Disneyland — I have two things I would like to tell you. There’s no reason to think that you will ever read this. I’ll just reach a handful of my fellow investors and call it a day.
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Image source: Disney.
Disney stock closed at $91.80 heading into the November 2022 weekend when it was announced that Bob Iger would be returning to lead the media giant that you — Josh D’Amaro — just inherited. Here we are, 41 months later, and the shares are trading just 9% higher. The S&P 500(SNPINDEX: ^GSPC) has risen 69% in that time. This brings me to a pair of inconvenient truths:
Disney’s all-time high of $203.02 was reached five years ago, under Iger’s initial replacement, Bob Chapek.
Despite achieving most of his major objectives, Iger didn’t just lose to the market. He lost to a money market fund.
Chapek may ultimately be redeemed from his current status as a punchline for many Disney enthusiasts. He was handed a new streaming service just months after its launch, and it thrived under his watch. He was given a collection of theme parks just as the COVID-19 outbreak was shutting them down, and they reopened to fewer turnstile clicks but ultimately achieved record revenue and operating profitability.
History will still regard Iger’s second run at the helm as a success. He turned Disney’s streaming operations profitable in fiscal 2024. He was able to smooth over Chapek’s battle with Florida’s governor and other politicos. There are still people on the right and the left who feel he didn’t go far enough in their direction, but his diplomatic centering is what Disney needed to return to serving the masses rather than making headlines.
Sure, it also didn’t hurt that Iger more than doubled the S&P 500’s return in his first 14-year stint as CEO.
Iger paid the price for underperforming the market this time. He had to fend off not one but two proxy battles heading into annual shareholder meetings, like the one today, which is serving as your christening.
Just don’t let near-term market gyrations force you into a hand you’ll regret playing later. It’s telling that two of last year’s biggest winners among media stocks were struggling businesses that were put up for sale. Abject failure isn’t worth the upticks.
Everyone likes you now, but everybody rallies around the backup quarterback until they are put into a game. The honeymoon period will fade as ransom demands from fans of Disney’s many businesses mount.
Pleasing Disney enthusiasts will always be harder than thrilling Disney investors. Theme park regulars are a mouse-eared cap full of contradictions. They want bar-raising attractions and nostalgia. They want low prices but also short lines. Never insult them by pointing out the obvious flaws in their expectations. Aim to deliver the impossible.
On the content front, every fandom niche has a puzzling laundry list of storyline outcomes and franchise turns they want to see realized. Adding to the level of difficulty, they are all different and typically incompatible. You know the drill. Aim to deliver the impossible.
In closing, learn from and thank Iger every step of the way. He has more than earned that much. However — and this is more important than you probably think — I want you to do something unexpected the moment that you score a new all-time high for Disney stock. It will take at least a couple of years to happen. It might take a lot longer than you would like. However, if the shares get there by more than doubling under your watch, I want you to thank Chapek. Give him the glow-up and the happily ever after he never got, from the company that got to where it was by making the impossible possible.
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