Disney Shareholders Continue To Suffer

A look at the Walt Disney Co (NYSE: DIS) stock chart shows how long investors have suffered. The shares trade below the S&P 500 year to date, for the last year, and for the most recent two-year period. Despite a very few bright spots, CEO Bob Iger has been unable to pull Disney’s dismal results out of their tailspin.

Iger was challenged by raider Nelson Peltz, who fought the Disney board for two seats. The board won, but investors might wish the proxy vote had gone another way. Peltz says he walked away with a $1 billion profit on the stock he bought to make the challenge. Disney also posted poor earnings just after Peltz ended his challenge.

Peltz’s attacks on Disney had some merit. Disney’s streaming business has lost billions of dollars since its launch in 2019. This improved in the last quarter, but its subscriber base remains smaller than Netflix and Amazon Prime Video. There are also almost another dozen services that compete with it. All suffer from what is known as “churn,” which means that people cancel, go to another service, and sometimes return. Each subscriber who leaves has to be replaced.

Disney also spends billions of dollars a year on feature movie production. Pixar, Marvel, and Lucasfilm were hit machines. Recently, the interest of once loyal filmgoers has cooled.

For years, Disney’s revenue and earnings have been based on the theme parks. In its latest earnings release, management said it expected strong financial results to slow. Part of the reason was wage inflation. Another issue was that Americans’ travel had slowed. A recent report by Yahoo says that theme park prices are up 5,000% in the last 50 years.

Perhaps the toughest news for investors is that none of Disney’s problems is likely to improve much soon.

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