With a market capitalization of $173 billion and a world-famous brand, there's no question that Walt Disney (DIS -0.45%) is not only a consumer favorite, but also a popular stock among investors. And recent notable changes could have an outsize impact on the organization. 

As of this writing, Disney's stock is down 53% from its all-time high set in March 2021, despite being up 9% so far this year. With shares under pressure and the business facing its own set of major challenges, what's in store for this top media stock? Can it recover in 2023?  

A struggling House of Mouse 

For a sense of what is going on at Disney, we should analyze the different business lines.

In the first quarter of 2023, ended Dec. 31, the Parks, Experiences, and Products segment accounted for 37% of overall revenue. The segment's revenue and operating income increased 21% and 25%, respectively, versus the year-ago period. This part of Disney looks to be in good shape thanks in large part to the post-pandemic travel boom and consumers' desire to be out and about again. 

At the bigger Media and Entertainment division, however, year-over-year revenue growth of just 1% dragged down the company's overall sales gain. Even more alarming is its $10 million operating loss, only one year after generating $808 million of operating income. 

There are some serious problems with Disney's direct-to-consumer (DTC) group -- a part of this division -- which includes the Disney+, ESPN+, and Hulu streaming channels. DTC posted an operating loss of $1.1 billion in the latest fiscal quarter, nearly double the loss of $593 million in the year-ago period. And the 161.8 million subscribers to Disney+ as of Dec. 31 were down from 164.2 million at the end of the year-ago first quarter. 

These uneven results left Disney with a free-cash-flow loss of nearly $2.2 billion in the quarter. The company's recent challenges, particularly the macroeconomic uncertainty, hurt the stock's ability to bounce back in the near term. 

Banking on Iger's leadership 

Bob Iger, who was Disney's CEO for 15 years in his previous term, replaced Bob Chapek in November last year when the board decided that it was time for a change. Bringing back a former CEO increases the chances that the company can get back on the right track, but also indicates that there are some serious problems.

In his latest stint as CEO, Iger has already realigned the business into three new operating segments: Disney Entertainment; ESPN; and Parks, Experiences, and Products. 

While that last segment appears to be chugging along quite nicely, the most notable goal that Iger mentioned is improving the bottom line for its DTC group. To do that, he has earmarked $3 billion in cuts to content spending as part of a larger $5.5 billion plan to reduce expenses. Disney also announced the layoffs of 7,000 employees. 

And Iger reiterated the goal of Disney+ reaching profitability by fiscal 2024. Working in the streaming service's favor is its wide range of intellectual property, as well as its massive user base. Also, a recent Disney+ price hike was reportedly well-received by customers, which could be a clear sign of inherent pricing power that it can continue taking advantage of down the road. 

But the streaming landscape has become extremely competitive. There are countless channels, all with their own compelling content. And with so many deep-pocketed companies trying to woo customers, it's likely that content costs will rise as competition for top talent remains hot. 

With shares well off their highs, Disney now sells at a forward price-to-earnings multiple of under 23. This valuation is more expensive than the S&P 500, but slightly cheaper than the Nasdaq Composite. For investors who believe that Disney will overcome its recent challenges and achieve Iger's vision of right-sizing the business, now could be a good time to consider buying the stock before it unleashes its true potential.

This is still one of the strongest and most recognizable brands in the world, and that certainly has value.