Disney (NYSE:DIS) may be headed for a turnaround in the coming months. The past two quarters have been difficult for the entertainment giant, which has primarily trended downward. Concerns about streaming network Disney+ cast uncertainty over the company as it struggled to find its footing. The past month has seen some improvements, though, and now a major development has thrust DIS stock back into the spotlight.
Activist investor Nelson Peltz has increased his stake in Disney and is allegedly seeking multiple board seats. This suggests that the Wall Street titan is on a quest to shake things up at the company, which will mean going toe to toe with CEO Bob Iger.
Which business leader is better equipped to lead Disney back to its place at the top of its industry? Let’s take a closer look at this news and assess what investors should be expecting.
What’s Happening With DIS Stock
Despite some volatility this morning, DIS stock has been performing well since news broke of Peltz’s investment. As of this writing, it is up 1.5% for the day.
Now, Peltz appears to be resuming his previous quest to steer Disney toward profitability. The billionaire investor currently sits on the boards of several prominent companies, including Wendy’s (NASDAQ:WEN) and Procter & Gamble (NYSE:PG). But his fund also holds a $2.5 billion stake in Disney, making him one of its largest shareholders.
This isn’t the first time he’s attempted to gain further influence. Earlier this year, Peltz launched a board seat battle at Disney when he penned an open letter criticizing Disney’s leadership and advocating for some executives to be removed. Now, sources close to Peltz believe he will seek multiple board seats, including one for himself. Per the Wall Street Journal:
“Trian, an influential activist investor co-founded by Peltz, had in its first fight been pushing Disney to plan for a successor to Chief Executive Bob Iger, who had held that role since 2005 before passing the reins to Bob Chapek in 2020. Last year, just as Peltz was kicking off his campaign, Chapek was fired by the board and Iger was brought back. Iger recently agreed to stay in his position through 2026.”
The scenario of an activist investor squaring off with a CEO is nothing new. It often unfolds, though, when a company has been struggling, putting the investor in the dominant position. Given how volatile DIS stock has performed this year, it’s safe to say that Peltz will have the upper hand if he gains the board seats.
Cut to Disney’s Boardroom
Leadership problems have certainly given investors cause to approach DIS stock with caution. The plan for Chapek to succeed Iger as CEO led to a mess that no one could have predicted. Peltz withdrew his campaign for a Disney board seat earlier this year after the company took steps to reorganize. But months later, he’s redoubling his efforts as Iger’s measures haven’t yielded satisfactory results.
He clearly believes that the company can turn around if the right changes are made. It’s unclear if Peltz will be able to procure the seats he needs to take control of Disney. But as this battle unfolds, investors should pay close attention.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
