PivotWhy Did Disney's Latest Earnings Cause Shares to Plunge? | Pivot
At a glance
WHAT IT’S REALLY ABOUT
Disney Stock Plunges Despite Streaming Turnaround, Activist Pressure Mounts Again
- The discussion examines why Disney’s stock dropped roughly 10–11% after an earnings report that showed streaming losses shrinking dramatically and nearing breakeven. While the market had been focused on Disney’s streaming turnaround, analysts instead reacted negatively to weaker guidance for the parks business as post-COVID travel demand normalizes. Kara Swisher and Scott Galloway argue that activist investor Nelson Peltz may re-emerge with more leverage if the stock stays depressed, likely forcing board-level changes and renewed succession planning. They also explore potential strategic moves for Disney, including shedding legacy TV assets, focusing on parks and streaming, and considering bold external CEO candidates.
IDEAS WORTH REMEMBERING
5 ideasDisney’s streaming losses are rapidly shrinking, signaling a path to profitability.
The company cut streaming losses from about $600 million to $18 million year-over-year, showing Netflix-like progress toward breakeven through tactics like password crackdowns and leveraging sequels of proven franchises.
Markets punished Disney for weaker parks guidance, not for streaming performance.
Investors reacted to forward guidance that park growth would be flat due to higher costs, inflation, and fading post-COVID ‘sugar high’ demand, causing a roughly 10–11% stock drop in a usually low-volatility name.
Activist pressure could intensify if the stock stays under sustained pressure.
Scott Galloway notes that if Disney’s stock falls below key levels and underperforms for a few quarters, Nelson Peltz is likely to push again for board seats and possibly a breakup or sharper strategy shift.
Shedding legacy TV and broadcast assets could unlock higher valuation multiples.
The commentators argue that Disney’s TV and linear assets (ABC, cable, ESPN) depress the overall valuation, as investors assign the lowest-multiple business to the full conglomerate; selling or spinning them could let parks and streaming be valued more richly.
Future streaming landscape will likely be dominated by a few major players.
They foresee consolidation in streaming, with Netflix, Disney, and Warner Bros. Discovery/HBO emerging as primary survivors, while companies like Paramount become acquisition or roll-up targets.
WORDS WORTH SAVING
5 quotesThe streaming market is just an amazing case study in economics because overspending built a huge market, but there was too much capital. Now it's being massively rationalized at an incredible clip.
— Scott Galloway
What they weren't expecting was that the analysts would get so jittery about the gift that was sort of the consistent gift that kept on giving, and that was the parks.
— Scott Galloway
If this stock goes sub 100 and underperforms, I don't think Nelson's going away… Nelson's back, and I think the board is gonna get very serious about a succession plan and trying to present a new strategy.
— Scott Galloway
Right now, those [TV] businesses… create a lower multiple on the entire business. Investors will find the worst business with the lowest multiple, and they will assign that multiple through the entire business.
— Scott Galloway
You let all the men return. She's gonna return just like the rest of them.
— Kara Swisher (on Sheryl Sandberg as a potential Disney CEO)
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