Shares of The Walt Disney Co. look as strong as a superhero, but the media company’s recent rounds of layoffs could act as an Achilles’ heel, some analysts warn.
The Burbank-based company’s stock closed at $118.61 per share on June 12, up 0.67% compared to the previous day. Disney’s stock price has climbed since the news broke about the layoffs on June 2, closing at $112.95. It reached a 52-week low in April, at $80.10 a share.
Many Wall Street analysts have been bullish about the media company, which has been lately boosted by stellar box office performance of movies such as the live action “Lilo & Stitch.” The company’s latest remake of the popular science fiction animated film has grossed about $807.6 million in global sales, and it’s forecasted to make nearly $1 billion in ticket sales, according to Hollywood trade journals such as Deadline.
Another potential boost to the stock is the company’s recent announcement that it would develop a new Disney theme park in Abu Dhabi. The company also just paid $439 million to take full control of streaming service Hulu from Comcast, which Disney Chief Executive Bob Iger said would give the company a stronger position in the streaming market.
Disney is navigating a strong market position, said Laura Martin, a senior media analyst with Needham & Co. She also noted that one of the company’s main competitors, Warner Bros. Discovery, was going to be distracted due to its recently announced split into two separate public companies, a streaming business and a studio company. This distraction will make Warner Bros. a less competitive adversary, Martin said.
Layoffs – but where?
The emphasis toward streaming and automation is one of the reasons given for layoffs in the past two years. In 2023, layoffs started with the bombshell notice – amid a very public activist shareholder fight with billionaire investor Nelson Peltz – that 7,000 workers would be laid off.
Martin predicted layoffs would continue in fields such as linear television.
“Businesses must keep costs in line,” she said. “With shrinking revenues (in linear television), we should expect to see structural layoffs every year.”
Disney said it will cut an unspecified number of jobs – said to be several hundred positions in television, film and corporate finance, according to media reports. Layoffs reported earlier this month follow job cuts confirmed in March, when 200 employees from Disney’s ABC News Group and Disney’s Entertainment Networks Unit were let go. In September 2024, Disney also laid off 200 workers.
The company has yet to file a single layoff notice with the state Employment Development Department, according to that bureau.
Disney creatives including Crystal Holt, the vice president for Disney-owned 20th Century Television, and Collin Sapera, vice president of drama development at Disney-owned ABC Television, were recently cut, according to Deadline.
Some analysts fear creative layoffs could cut more into what made the company strong in the first place.
Alicia Reese, a media analyst for Pasadena-based Wedbush Securities, said that there has been chatter that continued layoffs could cut into Disney’s creative roles, which are crucial for its continued success.
“I think there’s been some caution and concern from investors and fans that Disney will rely too heavily on AI for productions,” said Reese, who generally follows media and entertainment but does not specifically cover Disney.
