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Disney crushes earnings amid Trian proxy battle

Data: Yahoo Finance; Chart: Axios Visuals
Data: Yahoo Finance; Chart: Axios Visuals

Disney did what any company wants to do in the last quarterly earnings before a shareholder vote in the middle of a proxy fight: crushed it.

Why it matters: Disney's bumper earnings and slew of announcements Wednesday help make the case to shareholders that the company is on the right path, at a time when at least one major investor argues the opposite.

The latest: Disney's stock soared nearly 10% Thursday on the back of better-than-expected earnings and upbeat guidance — exactly the reaction it hoped for as Trian co-founder Nelson Peltz digs into the proxy war trenches.

Yes, but: A short-term stock spike only goes so far. Even Trian would have to nod to a solid quarter, but chances are the above chart is featured in the hedge fund's anticipated white paper.

The bottom line: Disney's recent progress, including striking deals in the last 24 hours with Fortnite owner Epic Games and with Taylor Swift, does not make up for the steep decline and sporadic whipsaws the stock has endured since 2021.

  • The value erosion has come amid a broader market rally, a point Trian will continue to make, though Disney is not alone when it comes to media and entertainment peers and their struggles, too.
  • "It's déjà vu all over again. We saw this movie last year and we didn't like the ending," Trian said in an emailed statement late Wednesday.

What they're saying: "We believe the quarter validates the strength of Disney's assets and the firm's ability to survive the evolution of the media industry," Matthew Dolgin, senior equity analyst at Morningstar, said in a research note.

  • However, Dolgin pointed out that Disney's linear and licensing business were lukewarm to poor and that the overall direction coming through in earnings was consistent with what the company has previously laid out.
  • "[W]e don't think the story has changed," he wrote.

What we're watching: It seems the next strategic move in the proxy war will come from Trian, in the release of a white paper that will make the case for change and aim to convince shareholders to vote for its two director nominees.

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