It's been a three-act show for Walt Disney (DIS -0.94%) and its stakeholders this year. The shares rallied earlier this year after pulling out all the stops ahead of a proxy battle with activist investors. Disney stock would go on to slump in the aftermath of the seemingly successful boardroom battle. The House of Mouse has then resumed its rallying ways, as segments that were once laggards are now leading the way.
Let's break down the three acts: the good, the bad, and the beautiful. With 2025 around the corner, let's also size up where this leaves Disney shareholders right now heading into next year.
Act one: The rise-up 37%
Shares of Disney hit the ground running in the 2024 calendar year. With at least two activist groups angling for changes and boardroom seats, the media giant made sure that it kept the good news trickling in ahead of the springtime annual shareholder meeting. The shares were trading 37% higher year to date in late March, less than a week before the proxy showdown.
Disney kicked off the calendar year with a blowout fiscal first quarter in early February. It used that opportunity -- its final financial presentation ahead of the early April shareholder meeting -- to turn a trickle of good news into a deluge of good tidings.
Here are just some of the confetti launchers Disney sprung in its quarterly update:
- The company lifted its goal of annualized cost savings for the end of fiscal 2024. It would now "exceed" its previously raised $7.5 billion target.
- It went shopping. Disney announced a $1.5 billion investment in Fortnite parent Epic Games (owned by Tencent Holdings ADR). The stake also established a partnership where Disney would create games and entertainment offerings within the popular online video gaming platform for young users.
- Disney ramped up its efforts to return money to its shareholders. It increased its semiannual dividend by 50%, even though the next payout wouldn't happen for another five months. The board also cleared the way for $3 billion in share repurchases, Disney's first buyback in six years.
- On the content front, Disney announced that it had secured exclusive Disney+ streaming rights for Taylor Swift's popular concert film that came out months earlier. It also bumped an animated Moana series it was working on for its streaming service into a full-blown theatrical release that has been the top draw at the box office these past two weekends.
The rising stock and encouraging newsreel did the trick. Many significant shareholders voiced their support of Disney ahead of the proxy battle. After a couple of sluggish years, Disney was trouncing the market again in 2024.
Image source: Disney.
Act two: The fall-down 32%
Something perhaps unexpected happened following its annual shareholder meeting. After front-loading the year with good news, its quiver was left pretty bare on the other end of its battle with activist investors. Disney's margin of victory in the boardroom also wasn't a blowout, so it was clear that some shareholders were still hungry for more.
Trian's Nelson Peltz -- the loudest of the activists looking for some say and sway in the boardroom -- would go on to dump his stake in Disney in early April. Others would follow suit. From its March 28 peak to its Aug. 8 trough, Disney shares would lose nearly a third of their value. The stock that at one point earlier in the year had been the Dow's biggest gainer was suddenly in the red year to date.
Questions again began to bubble up on the succession strategy for CEO Bob Iger. With his term ending in two years and the previous handoff fumbled badly, exclamation points turned into question marks.
The market also didn't like the fiscal second-quarter results posted in early May. Revenue came in light, and Disney warned that the fiscal third quarter would be challenging. Disney's iconic theme parks segment that was a bright spot early in the pandemic recovery was starting to meander. Disney stock went from being the Belle of the ball to Goofy.
Act three: The rise-up 39%
A lot has gone right for Disney in recent months, and the shares have roared back to life from their summertime swoon. The turnaround started two days after the early August trough for the shares, when Disney announced ambitious expansion plans for its theme parks and cruise line at a fan event in Anaheim.
The good news didn't stop there. Disney's boardroom may have announced its fourth chairman in three years in October, but it did promise to announce Iger's successor by early 2026.
Fears that Disney's studio was losing its theatrical touch after a mixed 2023 at the local multiplex have faded. Disney has put out the two highest-grossing films worldwide of 2024, Inside Out 2 and Deadpool and Wolverine, and Moana 2 should clock in as third by the time it finishes its theatrical run. Disney+ is now profitable, a sharp contrast from other media networks struggling to make their streaming endeavors pay off on the bottom line.
Disney's latest quarterly results initiated adjusted earnings per share projections for the next couple of fiscal years that exceeded analyst expectations. This isn't a rerun of February, when Disney was cashing its rain checks early. The positive developments taking place now should keep the media mogul rolling for a couple of years. The stage is set for the rally to continue into 2025.
