Shares in the Walt Disney (DIS 0.16%) have been off to a rough start so far in 2026. Since January, shares in the media conglomerate have pulled back by around 15%.
There are numerous reasons Disney shares have come under pressure, including uncertainty about the company's newest CEO and ongoing concerns about its linear TV-to-streaming transformation.
NYSE: DIS
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However, while this may be a frustrating turn of events for existing Disney stock investors, if you've yet to enter a position or want to add to one, current lukewarm sentiment for this media stock may work in your favor.
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Disney, its new CEO, and why shares have tanked since earnings
On Feb. 2, Disney released earnings for its first-quarter fiscal year (FY) 2026, the quarter ending Dec. 27, 2025. While the results themselves came in ahead of expectations, a major change announced at the same time had a larger impact on investor sentiment.
Together with the earnings release, Disney announced its plans to promote Josh D'Amaro, previously the head of the company's theme parks division, to replace CEO Bob Iger. There are many reasons D'Amaro was a natural fit for the role, including the fact that Disney's parks unit, Disney Experiences, is the company's most profitable, generating 71% of its overall operating income last quarter.
However, there is still uncertainty over D'Amaro, especially given his lack of experience on the content side of the business. While not certain, there may be concerns that D'Amaro lacks the expertise to finish executing what has been Disney's biggest strategic challenge as of late. That would be the transformation of its streaming business into a cash cow that generates enough cash flow to counter the further decline of Disney's broadcast and cable television networks.
Low expectations could work in everyone's favor
D'Amaro may be entering the CEO role with low expectations; this dynamic could benefit him and investors buying in today as well. Knowing full well the pressures, D'Amaro could decide to make a risky but bold move to reinstate investor confidence.
For instance, he could make one of several moves recommended by Guggenheim analyst Michael Morris. These include a spin-off of Disney's linear TV business, greater investment in new media franchises, reducing Disney's dependence on sequels and remakes, or even the acquisition of a major company in the user-generated content space. In the meantime, Disney trades for only 15 times forward earnings, below its historic valuation of around 20 and below that of streaming service stocks like Netflix, which trades for 29 times forward earnings.
Any sort of hint of a possible growth resurgence could be enough to shift sentiment back to bullish. While it may take some time for D'Amaro to establish and execute his own vision for Disney, now, while expectations remain low, may be the time to start buying Disney stock. Down the road, perhaps as early as Disney's next earnings release in May, sentiment could turn on a dime, with shares making a quick return to bull-market mode.
