Against seemingly long odds, Disney (DIS +0.01%) has staged a surprising comeback. Shares of the entertainment giant have jumped more than 50% off the low they hit last year, and keep pushing higher to set new 52-week highs.
Disney hasn't vanquished the challenges that pushed its stock to a nine-year low last year, but it has convinced investors that it's on the right track. Revenue, for example, was flat in its most recent quarter, but Disney seems well on its way to producing a profit in its streaming business by the September quarter as the company had previously promised.
That's one significant step investors should expect in the coming months. Let's take a look at other ways Disney stock will change over the next year.
Image source: Disney.
More building, less fixing
After returning to run the company in November 2022, CEO Bob Iger faced a litany of challenges. He refreshed the management team and restructured the business to align with the current realities of the business as it transitions to the streaming era.
Last November, Iger announced that the company was moving from fixing the business to building, a sign that Disney was ready to grow again. Since then, Disney has set a date for the premiere of its flagship ESPN streaming service in the fall of 2025, and formed a joint venture sports streaming service with Fox and Warner Bros. Discovery. The company also merged its Indian operations with Reliance Industries, finding a resolution to a business that has been a thorn in its side since its acquisition of Fox's entertainment assets in 2018.
Disney is also planning to acquire the remaining third of Hulu that it doesn't currently own from Comcast.
A year from now, we should have some more clarity into how Iger is building the company again. We'll also know details about things like the flagship ESPN streaming service, including pricing and content, and what's happening with the sports streaming JV with Fox and Warner Bros. Discovery.
We could also see Disney monetize its content in more new ways.
The identity of Iger's successor could become clearer
Iger originally retired in 2020, passing the reins to Bob Chapek. However, that proved to be the wrong choice, and the board brought Iger back in in late 2022. Iger now plans to stay until 2026, but investors are already anxious for a clear succession plan given that the company botched the previous one.
The debate over a successor has motivated some of the activist investors clamoring for change in Disney's board. Some of those investors have demanded greater clarity into the succession plans, or even that Disney considered splitting into a theme parks business from the media and entertainment business, or selling Disney.
The shortlist of potential successors, including Dana Walden and Alan Bergman, the co-chairs of Disney Entertainment, are among the names most often mentioned as the next CEO.
Deciding on a successor, or at least giving investors more clarity on the subject, should give the stock a boost, as it will help eliminate some uncertainty.
NYSE: DIS
Key Data Points
Streaming profits are coming
Disney has already set a target for streaming profits, but the bigger question is how profitable the streaming business is.
The company implemented an aggressive price hike last October, added an advertising tier to Disney+, and cracked down on password sharing.
Those moves have the potential to make the streaming business significantly profitable, especially with the coming launch of the flagship ESPN streaming service. By next year we should have some more clarity as to how profitable the streaming segment can be. The success of the streaming business could be the biggest determinant of the stock price.
Disney in 2025
Disney is at a transitional moment as the entertainment industry shifts to streaming, but if the company executes, the stock could go significantly higher next year.
Keep an eye on Iger's efforts to adjust and monetize Disney's assets, the succession plan, and profits from its streaming segment.
If investors like what they see there, the stock could soar.
