Why Did Disney's Latest Earnings Cause Shares to Plunge? | Pivot
Kara Swisher (host), Scott Galloway (host)
In this episode of Pivot, featuring Kara Swisher and Scott Galloway, Why Did Disney's Latest Earnings Cause Shares to Plunge? | Pivot explores 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.
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.
Key Takeaways
Disney’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.
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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.
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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.
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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.
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Future streaming landscape will likely be dominated by a few major players.
They foresee consolidation in streaming, with Netflix, Disney, and Warner Bros. ...
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Focusing on a clear core—parks as cash cow, streaming as growth engine—is critical.
The suggested strategy for Disney is to double down on parks and streaming, while letting private equity or other buyers roll up declining linear TV assets and manage them as cost-cutting ‘bad bank’ businesses.
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Leadership and succession decisions will shape Disney’s strategic direction.
With Iger under pressure, the board may accelerate succession planning and consider unconventional external candidates—ranging from tech and media operators like Evan Spiegel to figures like Sheryl Sandberg—to reset investor confidence.
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Notable Quotes
“The 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)
Questions Answered in This Episode
How sustainable is Disney’s path to streaming profitability once password crackdowns and sequels are fully leveraged?
The discussion examines why Disney’s stock dropped roughly 10–11% after an earnings report that showed streaming losses shrinking dramatically and nearing breakeven. ...
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What specific operational or pricing changes could Disney make to stabilize parks EBITDA without undermining guest experience?
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If Disney spun off or sold its linear TV assets and ESPN, how might that reshape both Disney’s strategy and the broader media ecosystem?
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At what stock price or performance threshold should Disney’s board seriously consider breaking up the company into separate entities?
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What qualities should Disney prioritize in its next CEO to navigate the shift from legacy media to a parks-and-streaming-centric future?
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Transcript Preview
... although he had some issues with the earnings, Disney earnings. CEO Bob Iger saw the streaming part of his business is on track to profitability. It's not quite there yet, but they only lost 18 million on streaming this quarter compared to over, this number is incredible, $600 million in the same quarter last year. That's a good thing, actually, because it looks like it's just like Netflix. It's moving to profitability. Um, investors weren't sold on that news. Shares sunk 10% based on some jitters around the parks business. Growth is expected to be flat there in Q3. The CFO is blaming higher operating costs, inflation, and quote, "Global moderation from peak COVID, uh, peak COVID travel for that." People went to the parks, jammed them, and now are back to normal behavior. Scott, let's focus on the streaming. This business is leaning into password crackdowns and sequels. Um, password crackdowns have worked really well for Netflix. Um, they, um, uh, they've been taking away passwords. My kids are depressed now because they can't my pass- my Netflix thing. Um, and now I have to pay for more of them. Um, uh, there, that, that helped Netflix a lot, so password, um, and making sequels. They've got a Moana sequel, one for Inside Out, and our favorite, Deadpool. Um, there's two Frozens coming up soon. They've sort of leaned out of the Marvel universe 'cause it's gotten, the MCU, because, uh, it's- it's- it's a little tired. So talk a little bit first about streaming and then where every... I think the parks will be fine. They'll be fine. They'll figure it out.
This was really unusual because-
Yeah.
... if I just read the earnings report, I wouldn't have guessed... Disney on its, on announcement of its earnings, it had one of its worst days, and it's usually not a very volatile stock, and it lost 10% of its, I think it was even 11% of its value at one point in one trading day. And what's interesting is I don't think they saw this coming because the market's been focused on their streaming losses.
Mm-hmm.
And effectively, they're now breakeven. The streaming market is just an amazing case study in economics because overspending built a huge market, but there was, people were spending too much capital. Now it's being massively rationalized at an incredible clip. 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. And when they gave forward guidance saying, "Look, the sugar high of COVID or people wanting to get out-"
Post-COVID, yeah.
... "post-COVID is wearing off, and the parks might not produce the massive EBITDA," and it took the stock way down. This might, this might create some unnatural acts at the company because the bottom line is that if this stock goes sub 100 and underperforms, I don't think Nelson's going away, the activist. This was an activist investor who was trying to get a seat on the board.
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