What's Going On With Disney Stock Wednesday?

Walt Disney Co DIS stock is trading higher Wednesday as reports indicate activist investor ValueAct has been building a stake in the company.

ValueAct Capital began buying Disney in 2023 summer during the Hollywood strikes, and it is now one of the largest shareholders, CNBC cites Activist Spotlight.

Also Read: Disney Scrutinizing its TV Network Portfolio

ValueAct notes that Disney's theme parks and consumer products businesses and their $10 billion in EBIT are alone worth low $80s per share.

The theme parks unit has a high return on capital, allowing Disney to monetize its intellectual property further, which keeps Disney at an advantage over its peers. Moreover, this business is not threatened by technology but enhanced by it.

ValueAct, known for enhancing profitability and revenue in companies like Salesforce, Inc CRM and Microsoft Corp MSFT, sees potential in Disney for similar improvements. 

Disney can increase revenue through bundling, pricing tiers, and advertising strategies, as seen in ValueAct's successes with the New York Times Co NYT and Spotify Technology S.A.  SPOT. This approach could significantly increase Disney's EBIT and stock value.

Bob Iger's return to Disney, his contract extension through 2026, and the board's focus on succession planning present an opportunity for ValueAct to contribute, especially given their experience in CEO transitions at Microsoft. 

Disney's current proxy fight with Nelson Peltz and Trian Partners also positions ValueAct as a constructive alternative for the board.

Price Actions: DIS shares traded higher by 3.20% at $93.99 on the last check Wednesday.