Disney Stock Jumps After Bob Iger Announces Major Layoffs

On February 8, Bob Iger held his first earnings call since taking over as CEO once again. Chapek has been in charge since November 2022, when Disney’s Board of Directors decided to fire CEO Bob Chapek after years of turmoil. Since Iger has stepped back into the role he knows so well, he has made several big changes, mainly on the theme park level. Wall Street, the Hollywood entertainment industry, and Cast Members alike were all excited to see Iger return, and the earnings call was his first big test.

Credit: CNBC

Perhaps one of the biggest announcements made during the earnings call was that the company would be looking to cut costs, and part of that would come in the form of layoffs. Iger said that, in the coming weeks, the company would be laying off 7,000 employees across the company — although the layoffs would not affect Cast Members who work in the theme parks.

While the news would be upsetting to many, it was not to Wall Street. In fact, Disney shares jumped 4% — to more than $118 per share — on the morning following the call. Per a report from The Hollywood Reporter:

Bank of America’s Jessica Reif Ehrlich reiterated a “buy” rating with a target of $135 a share, noting: “While we are encouraged by Bob Iger’s strategic vision for DIS, this is clearly the first phase in DIS’ transformation, which will require adept execution. Bob Iger has a long, strong track record which provides confidence he will manage this transition for DIS.”

Wells Fargo’s Steven Cahall raised his stock price target by an additional dollar, moving from $115 to $141, while sticking to his “overweight” rating for Disney, which is one of his firm’s so-called “signature picks.” Disney’s earnings update provided “everything the bulls wanted,” he explained. “Bob Iger returned by delivering the goods: cost cuts ($2.5 billion in selling, general and administrative versus our $2 billion estimate plus incremental $3 billion content savings over time), pulling the Disney+ sub guidance, curating the content strategy (i.e. backing off of general entertainment/local), ring-fencing ESPN (new stand-alone segment includes ESPN+), promising to have a dividend this year (albeit modest) and reaffirming high-single-digit growth in fiscal year 2023 operating income. While the future isn’t 100 percent certain, the strategy is: profit.” Cahall also lauded Iger in a pun in the title of his report, writing: “He’s The Profit.”

Credit: Twitter

In addition to announcing the budget cuts and company layoffs, Iger also made some more positive announcements. He said that Disney shareholders would once again be receiving dividends, which had been put on pause. He also shared that he would be bringing creativity back to the creatives, who will be responsible for what movies the company makes, how those movies are marketed, and how those movies perform. Iger further shared that Disney would be making sequels to Toy Story, Zootopia, and Frozen.

Credit: Disney

The move back to Disney being focused on creativity was something that had sorely been lacking during the less-than-three years that Bob Chapek was in control. During that time, Chapek consolidated creative power with a few people that he had hand-picked. The change back to creatives getting control is expected to help the company make a big turn.

Since the market opened, shares have dropped a few dollars, but that is mainly due to activist investor Nelson Peltz ending his proxy fight. However, shares are still over $114, up more than 2% from the days before the call.