What happened
Shares of Disney (DIS -0.45%) were surging today after the company annonunced a surprise move at the CEO position last night.
It is bringing back Bob Iger to replace Bob Chapek after the company's lackluster performance during Chapek's tenure.
The stock was up 8.1% as of 10 a.m. ET on Monday.
So what
Iger led Disney for 15 years before retiring as CEO in 2020, and is the architect of the entertainment stock's modern corporate strategy. Under his leadership, Disney acquired Pixar, Marvel, Lucasfilm, and Fox's entertainment assets, greatly expanding its library of content, and adding valuable intellectual property that it has turned into blockbuster movie franchises like the Marvel Cinematic Universe and the Star Wars films, as well as theme park rides.
Armed with that bounty of new content, Disney also successfully launched the Disney+ streaming service in November 2019, shortly before Iger's departure.
Disney said Iger has agreed to serve as CEO for two years "with a mandate from the Board to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term."
Chapek was charged with the difficult task of leading the company through the pandemic when movie theaters and theme parks were shuttered, but over the last year, the stock has continued to struggle as its streaming division has bled cash, and investors have lost confidence in its growth strategy.
As the chart below shows, Disney stock has badly underperformed the S&P 500 during Chapek's tenure.
Now what
Given Disney's struggles over the last year and Iger's sterling reputation with investors and in Hollywood, it's clear why the stock is rising today.
While investors shouldn't expect any sudden moves with Iger back at the helm, he's likely the best person to lead the company as it transitions from a linear media business to a streaming one.
The market seems to agree.
