Disney’s shares have enjoyed the biggest intraday jump in close to two years, after the entertainment giant sacked struggling CEO Bob Chapek and reinstalled his predecessor, Bob Iger.
Disney shares gained as much as 9.9 per cent after the announcement yesterday afternoon, the biggest jump since December 2020.
Disney shares peaked at US$203.02 in March of 2021 and closed November 18 at just US$91.80.
Disney shares fell to a two-and-a-half-year low on November 10, after reporting a massive A$2.3 billion loss from its streaming division, and missing analysts’ forecasts for the fourth quarter.
By last Friday, shares had fallen 41 per cent this year alone. Disney is on track to deliver its worst single-year share price drop since the mid-1970s, assuming Iger cannot turn the massive ship around in the next six weeks.
Iger was CEO of Disney from 2005 to 2020. During his 15-year rein, the company acquired Marvel, Lucasfilm, and Pixar – three of the company’s more valuable assets, and vital to the launch of Disney+, which Iger also oversaw.
Chapek (below) took over as CEO in February 2020, just as the pandemic was to hit.
He struggled through the closing of theme parks and cruises during the pandemic, while benefitting from the uptick of Disney+ subscribers the pandemic brought.
His actions rankled shareholders and staff alike.
After Disney decided to release the film Black Widow online, cutting star Scarlett Johansson’s back-end profits, she sued. In response, Chapek suggested she already earned more than enough, a tone-deaf remark interpreted as sexist by many.
Chapek also stated Disney wouldn’t take a position on legislation barring gender identity discussions in Florida classrooms, which led to a backlash from employees.
Further changes to the theme parks sector, and various internal processes further put staff offside.
“The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period,” Susan Arnold, chairman of the board, said in a statement, effectively ending Chapek’s rein.
Chapek was “blindsided by the move” to replace him, according to company sources who spoke to the NY Post.
“At the end of last week he did not know what was about to happen. It was definitely a shock to Chapek.”
This isn’t surprisingly, given Susan Arnold gave Chapek her public support in June.
“The strength of The Walt Disney Company’s businesses coming out of the pandemic is a testament to Bob’s leadership and vision for the company’s future,” Arnold said in a June statement.
“In this important time of business growth and transformation, we are committed to keeping Disney on the successful path it is on today, and Bob and his leadership team have the support and confidence of the board.”
Despite the blindside, Chapek is poised to leave Disney with a A$34.8 million payday.
Ironically, should Iger steer the ship back to less choppy waters, Chapek’s stock options will be worth even more.
