Key Takeaways
- Disney shares were moving higher early Thursday, after falling more than 3% the previous session, as investors contemplate what lies ahead for the company after winning its proxy vote battle.
- Shareholders voted to re-elect all 12 of Disney’s current board members at the entertainment giant’s annual meeting on Wednesday, rebuffing bids from activist investors Trian Partners and Blackwells Capital to win board seats.
- Disney shares may encounter overhead resistance around $126.50 from the August 2022 swing high.
Disney (DIS) shares edged higher in early trading Thursday as investors contemplate what lies ahead for the entertainment conglomerate a day after it successfully fended off activist investors’ bids to win board seats and gain greater influence over the company’s corporate governance.
Preliminary results on Wednesday revealed shareholders overwhelmingly backed Disney CEO Bob Iger’s ongoing turnaround plan by re-electing all 12 of the company’s current board members. Nelson Peltz’s Trian Partners had proposed Peltz and formed Disney finance chief Jay Rasulo for board seats, while alternative investment manager Blackwells Capital had put forward three candidates.
“We’re eager to focus 100% of our attention on our most important priorities, growth and value creation for our shareholders and creative excellence,” Iger said in a statement after the vote.
While the entertainment giant won the proxy vote battle, it still faces numerous challenges on the horizon, such as finding a suitable successor for Iger ahead of his planned 2026 retirement, revitalizing its struggling film business, and turning its streaming division profitable.
Regarding the latter, Inger told shareholders at yesterday’s meeting that he expects the steaming business to reach profitability by the end of fiscal 2024. The company recently expanded its streaming library by combing Disney+ and Hulu, while its ESPN partnership with Warner Bros. Discovery (WBD) and Fox (FOXA) announced in February will create a joint sports streaming service to take on rivals in the space, such as Netflix (NFLX).
Iger’s turnaround plan also involves a play on video gaming to resonate with younger generations through a $1.5 billion investment in Fortnite maker Epic Games, which the company also disclosed earlier this year. “Iger now has a window by which to execute his recovery plan,” said Dan Coatsworth, analyst at investment platform AJ Bell, according to Reuters.
After putting in a double bottom in October last year, the Disney share price has continued to move higher, with gains accelerating after the 50-day moving average crossed above the 200-day moving average to flash a golden cross buy signal in early January. Looking ahead, investors should closely monitor the $126.50 region, where the price may encounter overhead resistance from the August 2022 swing high.
Disney shares were up 0.4% at $119.50 about 10 minutes after the opening bell Thursday. The stock has gained more than 30% since the start of the year.
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