Bob Iger, Walt Disney Company's CEO and Chairman, has sold more than 553,297 shares in the last three days. According to Disney's most recent Form 4 Filing, Iger owned 1,566,484 shares on June 7th, and he now owns 1,013,187 shares (as of June 9th). This represents a 35.32% trim in Iger's holding of the iconic American company.
What This Means for Disney Shareholders
While it is normal for company executives to diversify their personal investments when their stock options are fully vested, in certain situations it can be a cause for concern for shareholders. In this particular case, Iger's stock options were fully vested, but the expiration of the options was 1/13/2020. This means that Iger had roughly 2.5 years to wait before exercising the stock options if he believed Disney's stock price would experience continued growth. Iger exercised 100% of the vested stock options granted to him.
Even though Iger continues to own slightly more than 1 million shares, the decision to cut his holdings by 35% gives a strong indication that Iger is not very confident in Disney's current stock price. Shareholders should be concerned by this because Bob Iger has the most intimate, inside knowledge of the company's day-to-day operations and performance.
Trouble in Disney's Business
The Walt Disney Company is often viewed as a proxy for the overall health of the American economy and the overall stock market. While the outlook for the US economy remains strong, Disney has become bloated in recent years and has experienced challenges with corporate strategy decisions made outside of the company's core competencies.
One particular issue, which many Disney shareholders have concerns about, is ESPN-- Disney owns a controlling stake in ESPN after its 1996 acquisition of ABC.
Not only are more and more households choosing to "cut the cord" on ESPN subscriptions, ESPN and ABC have had to lower their subscription price points in response to the changing landscape of American entertainment.
DIS Stock Outlook
With seemingly few positive catalysts and plenty of challenges ahead for the company, we maintain a neutral outlook on DIS stock. The Stock Trader Blog is not adding it to either our List of Bullish Opinions or our List of Bearish Opinions. Personally, I believe Disney will trade on par with the overall market. Additionally, the current dividend yield on DIS is not attractive enough to merit a bullish opinion on an investment basis.