HI Market View Commentary 11-21-2022
HAPPY THANKSGIVING !!!
What typically happens during this week?
Lower stock trading volume every day other than Monday
Lower 2/3rds option trading volume
Black Friday and Cyber Monday happen with results out next Monday on Black Friday retail sales
Market closed on Thursday & Friday is a half day closing at 1pm EST
There is no volume Wednesday & Friday = It won’t verify a trend
Wednesday all economic report come out
OK Let’s talk Disney !!!!
Iger is back or the person who put into place $200 stock price took over the CEO Position
Cleaning house with new director / media department
Disney + most likely will go back to the cheapest media round
Florida probably going back to the way it was with Disney
The debt they incurred is already bleeding off but Iger will pos likely make it a priority – Purchase of the 33% Hulu stock that comcast owns
Let’s also talk about timing again. Why would you ask about puts?
It’s technical, fundamental and sentimental analysis including historical cycles or tendencies.
Visa and what are we doing? NO Protection
Yes no protection because consumer spending +, Consumer credit +, Seasonal consumer spending +
BIDU 11/16 est
COST 12/08 AMC
DG 12/01 est
MU 12/20 AMC
The Big Picture
Last Updated: 18-Nov-22 15:40 ET | Archive
About that Walmart earnings report
Walmart (WMT) is the world’s largest retailer. It is also a Dow component and member of the S&P 500 consumer staples sector thanks to its status as the largest grocer in the U.S.
On November 15, Walmart reported its fiscal third quarter results and they were good results. The company easily topped the consensus EPS estimate, aided by an 8.8% year-over-year increase in revenues of $152.8 billion and an 8.2% increase in comparable sales for its Walmart U.S. division, excluding fuel. Its adjusted operating expenses as a percentage of net sales decreased by 75 basis points and helped drive a 3.9% increase in adjusted operating income.
But we’re not here to talk about Walmart’s earnings. We’re here to talk about what Walmart said about its third quarter performance, because what it said ultimately said a lot about the U.S. economy.
Points of Emphasis
CEO Doug McMillon got right to [our] point on the earnings conference call. The first thing he chose to highlight was the following:
“We delivered strong results on the top line across our segments, and our value proposition is resonating with customers and members around the world. We see this in our grocery business in stores and online in key markets like the U.S. and Mexico. Customers that came to us less frequently in the past are now shopping with us more often, including higher-income customers (emphasis our own).
CFO John David Rainey noted later on the call that “High fuel prices and mid-teens food inflation have forced customers to manage household budgets more tightly, making frequent trade-offs and biasing spending toward everyday essentials (emphasis our own).”
He later added that “…we’ve continued to gain grocery market share from households across income demographics, with nearly three-quarters of the share gain coming from those exceeding $100,000 in annual income. This quarter, our private brand penetration in food categories increased about 130 basis points, reflecting customer’s increased focus on quality products at value prices. We observed incremental trade-down in categories including proteins, baking goods, baby, and dog food.”
Mr. Rainey detailed that food sales continues to lead the Walmart U.S. division with mid-teens growth, but that general merchandise sales declined low-single digits with softness in electronics, home, and apparel (emphasis our own).
The company’s earnings presentation pointed out that the 8.2% comparable sales growth in U.S. was led by a 2.1% increase in transactions and a 6.0% increase in average ticket (i.e., inflation), driven by strength in food categories and private brand sales.
For Walmart International, the double-digit net sales growth for the Walmex division was paced by continued strength in food and consumables. Strong growth in Sam’s Club and eCommerce led a 6.9% increase in net sales for China, and for Canada, which registered a 5.5% increase in net sales growth, it was said that sales in food and consumables outpaced general merchandise.
Finally, Sam’s Club achieved 10.0% comparable sales growth, led by comparable sales gains in every category except technology, office and entertainment, which saw a mid-single digit decline on softness in consumer electronics.
What are some of the key takeaways from what was heard from Walmart?
- Consumers are feeling the effects of persistently high inflation, including higher-income consumers, so they are seeking lower-cost providers.
- Consumers are starting to spend more now on what they need as opposed to what they want.
- Consumers are increasingly price conscious and, consequently, are trading down to private brands.
- Consumers see the cost benefits of buying in bulk, which is contributing to the ongoing strength at Sam’s Club (and Costco for that matter).
- Inflation is a global problem, and with the current high rates of inflation, it is not just an issue for low-income consumers.
What are some likely outcomes in coming months/quarters as we read between the lines of the report?
- Growth will slow as consumers rein in their discretionary spending.
- Inflation should ebb as end demand weakens at the same time supply chains improve.
- Companies are going to start losing pricing power as more consumers, out of necessity, refrain from paying full prices.
- Corporate profit margins should be under pressure, absent more aggressive cost-cutting actions.
- Branded products should see market share erosion as consumers shift purchases more to private label/generic products.
- Concerns about job security should lead to more prudent spending behavior.
A Hammer and a Nail
The main takeaway is that the economic environment is deteriorating in large part because of the strain that high inflation is putting on household budgets, particularly for things that are needed the most — like food and energy — but also now because of the lag effect, and psychological effect, of the Fed’s rate hikes.
Some things are slowing naturally, yet it is the fear, too, that things will slow much more as the cumulative effects of the rate hikes make their way through the economy.
The Fed is working feverishly to get inflation under control. Its main policy tool has been to hike the target range for the fed funds rate. It is using that tool like a hammer, too.
Fittingly, Fed officials keep hammering home the point that the fed funds rate is not yet at a sufficiently restrictive level, that more rate hikes are necessary, and that the terminal rate (whatever that ends up being) is apt to remain in place for a while once it is reached.
The concern for the market is that the Fed is going to nail the economy to the ground with its rapid rate hikes and possibly six feet under. That concern has manifested itself in the Treasury market where there are deep inversions along the yield curve.
The 3mo-10yr spread, which some regard as the best recession harbinger, is inverted by 43 basis points and the 2yr-10yr spread is inverted by 67 basis points.
What It All Means
To be fair, there were some pleasing reports from other retailers, like Home Depot (HD), Lowe’s (LOW), and Foot Locker (FL), as well as a stronger-than-expected October Retail Sales Report, which pointed to some ongoing vibrancy in the U.S. consumer.
Things are by no means at a dire level yet. In fact, the Atlanta Fed GDPNow model estimate for Q4 real GDP was raised (emphasis our own) to 4.4% from 4.1% following the Retail Sales Report. It currently sits at 4.2%.
That is a long way from a contraction in growth, but the message from the Walmart report is that changes in consumer spending behavior are happening on the margin and are starting to move inward; hence, the migration of more higher-income households to Walmart’s shopping aisles.
That migration is destined to persist as the Fed keeps raising rates, as more companies announce layoffs, as the housing market continues to cool, as debtors face higher repayment burdens on variable rate debt, and as consumers continue to draw down excess savings.
As an aside, the personal savings rate as a percentage of disposable personal income is 3.1% versus 33.8% at its pandemic peak. Other than the 3.0% rate seen in June, that is the lowest it has been since the financial crisis.
That’s not a good starting point with the Fed desiring some weakening in the labor market to tame wage-based inflation pressures. It leaves many consumers in a precarious position should they lose their job. On that note, CNBC highlighted a LendingClub report that indicated 60% of Americans were living paycheck to paycheck as of October, up from 56% a year ago.
This understanding could ultimately work more in Walmart’s favor, but what’s good in coming months for Walmart — the world’s largest retailer and the U.S.’s largest grocer — won’t necessarily be associated with an economy that is in good shape.
Right now, the shape of the yield curve and the low level of personal savings suggests Walmart should have more business coming its way.
(Editor’s Note: the next installment of The Big Picture will be published the week of November 28)
|WEEK OF NOV. 14 THROUGH NOV. 18, 2022
|The S&P 500 index shed 0.7% last week, led by the consumer discretionary sector as a number of retailers released weaker-than-expected quarterly results and cut their forecasts.
The market benchmark ended Friday’s session at 3,965.34, down from last Friday’s closing level of 3,992.93. The decline erased only part of last week’s 5.9% jump; the S&P 500 is still up 2.4% for November to date. Nevertheless, the S&P 500 is solidly in the red for 2022 thus far with a year-to-date drop of 17%.
The weekly decline came as some retail companies including Target (TGT) reported quarterly earnings below analysts’ expectations and lowered guidance. The week’s drop also reflects a paring of the excitement over slower-than-expected inflation that fueled last week’s rally.
Among the S&P 500’s sectors, the consumer discretionary sector had the largest percentage drop last week, sliding 3.1%, followed by a 2.4% drop in energy, a 1.8% decline in real estate and a 1.6% slip in materials.
Advance Auto Parts’ fiscal Q3 adjusted earnings per share and revenue both missed analysts’ expectations amid a margin contraction. The company also lowered its full-year profit forecast, citing currency fluctuations. Shares fell 21%.
Mohawk Industries’ shares slipped 9% as the company reported fiscal Q3 adjusted earnings per share that merely matched the Street view while revenue missed analysts’ mean estimate.
The energy sector’s drop coincided with a decline in crude oil futures. West Texas Intermediate crude oil hit its lowest level in six weeks on Friday as a rising number of new Covid-19 cases in China added to concerns over demand from the world’s No.1 importer. The sector’s decliners included Coterra Energy (CTRA), which fell 6.5%, and Marathon Oil (MRO), which slid 6.3%.
The real estate sector’s drop came as investors worried about the impact of higher lending rates on the real estate market. Decliners included Boston Properties (BXP), down 6.8%; and Welltower (WELL), down 5.3%.
On the upside, the gain in consumer staples was led by Walmart (WMT), which reported quarterly results above analysts’ mean estimates and raised its full-year guidance as high inflation is expected to fuel more demand for the company’s discounted prices. Walmart’s shares climbed 5.4%.
Next week, inflation will continue to be a focal point as inflation expectations from the New York Fed are expected on Monday. Retail sales for October are due Wednesday while October building permits and housing starts are also due Wednesday. Investors will get another reading on real estate on Friday, when existing home sales for October will be released.
Provided by MT Newswires
Where will our markets end this week?
DJIA – Bullish
SPX –technically bullish
COMP – Bullish looking to cross bearish again
Where Will the SPX end November 2022?
Mon: DELL, ZM
Tues: ANF, BBY, BURL, DKS, DLTR, JACK, ADSK, GES, HPQ, JWN, VMW, BIDU
Wed: MBA, Initial Claims, Continuing Claims, Durable Goods, Durable Goods ex-trans, New Home Sales, Michigan Sentiment
Fri: Half Day
How am I looking to trade?
Currently have protection on for downward market movements, SPY puts in accounts for possible earnings disappointment
www.myhurleyinvestment.com = Blogsite
firstname.lastname@example.org = Email
Baidu (BIDU) Q3 2023 Earnings: What to Expect
NOV 21, 2022 7:51AM EST
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Renewed optimism about improved cooperation between the United States and China had brought life back into Chinese tech stocks like Baidu (BIDU) which has been under pressure for most of the year. Aside from concerns about being delisted from U.S. exchanges, Baidu has fallen victim to increased regulatory scrutiny from the Chinese government.
Each of these issues, however, could be a thing of the past. Investors are now reconciling the value of Baidu which still has fast growing businesses. The Chinese tech giant will report third quarter fiscal 2023 earnings results before the opening bell Tuesday. Last week, during a meeting at the G-20 Summit in Bali, President Joe Biden and Chinese President Xi Jinping said that the two nations would have more frequent communications. While acknowledging that the U.S.’s One China policy has not changed, Biden said the U.S. is not looking for conflict with the world’s most populous country.
In response, among other Chinese stocks, Baidu stock rose 9%. But the shares are still down 33% year to date, while falling 40% over the past year, trailing the S&P 500 in both spans. China’s own regulatory crackdown on tech companies has been the main reason for Baidu’s decline. China’s SAMR has demanded better corporate governance, anticompetitive practices and improved political posturing, all of which sparked fears among U.S. investors that Baidu’s core marketing business won’t grow as expected, nor will it be able to accelerate its growth in the cloud.
Currently trading at around $95, Baidu stock has not delivered the returns that investors have expected. The shares remain heavily discounted relative to its long-term potential, especially amid improved relations between China and the U.S. For any of this perceived value to matter, on Tuesday the company must speak positively about its growth potential for the next year and beyond.
In the three months that ended September, Wall Street expects the Beijing-based company to earn $2.16 per share on revenue of $4.48 billion. This compares to the year-ago quarter when earnings came to $2.30 per share on revenue of $4.44 billion. For the full year, ending in January, earnings are expected to rise 10% year over year to $8.19, while full-year revenue of $17.41 billion would rise about 0.6% year over year.
Often referred to as the “Google of China,” the company’s two main business segments are Baidu Core and iQiyi (IQ). The former accounts for roughly two-thirds revenue. The remaining revenue comes from iQiyi which in 2013 Baidu bought a 56% stake. The market is waiting for signs that China’s regulatory crackdown, which also forces companies to increase its investments in the country, will have minimal impact.
So far, Baidu has shown a willingness to comply with the new regulations and do so while still meeting its operating objectives. In the second quarter, Baidu reported a top and bottom line beat, posting adjusted earnings of $2.36 per share which beat consensus estimates by 72 cents. Although Q2 revenue of $4.43 billion declined 11.3% year over year it still surpassed estimates by $42 million. Aside from a slowing global economy that hurt demand and ad revenue, the company was adversely impacted by China’s COVID-19 related lockdowns.
Baidu continues to rely on the strength in its core business, particularly non-online marketing and cloud services. The company’s AI Cloud revenues momentum reached 31% year over year and 10% sequentially. Just as impressive, non-online marketing revenue rose 22% year over year to $906 million, offsetting the 13% decline in revenue attributed to iQiyi. On Tuesday investors will want to see whether these positive metrics can continue.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Bond recession indicator hits most extreme level in 40 years, raising questions about stock rebound
PUBLISHED FRI, NOV 18 202210:32 AM EST
A closely watched part of the bond market for its recession prediction abilities reached its most extreme levels since 1982, casting doubt over the stock market rebound since mid-October.
The spread between the 2-year Treasury yield and the 10-year rate reached 68 basis points on Thursday, the widest in four decades on a closing basis (One basis point equals 0.01%).
The so-call yield curve shows investors what they can expect to earn from different maturities. Longer-duration bonds typically yield more than short-term ones given that investors take on more risk to hold them. A flip in that relationship, or inversion of the curve, is typically viewed as a signal that a recession is on the horizon. The yield curve inverted before the 2020, 2009, and 2001 recessions but often with large lag times.
But even with this flashing warn sign, stocks have staged a solid comeback as a better-than-feared CPI print hinted that inflation may be easing and ignited hopes that the Federal Reserve may soon slow its tightening pace. Meanwhile, the S&P 500 is up roughly 2% this month and just below the 4,000 level after posting its best weekly stretch since June last week.
“My contention would be that ultimately the yield curve is going to prove correct,” said Gregory Faranello of AmeriVet Securities, saying it takes time for equities to catch up with what’s happening with the yield curve. “The economy is going to slow more significantly as we head into 2023, and, I think at some point risk assets will grasp that notion and probably head back down lower.”
Strategists also closely watch the relationship between the 10-year and 3-month Treasury notes, which hit a deep inversion this week and has an “excellent track record” of predicting a recession, said LPL Financial’s Quincy Krosby.
To be sure, equities can rally even with an inverted yield curve, and they’ve done that in the past. Strategas’ Chris Verrone pointed out in a note to clients Thursday that the 1979-to-1980 inversion saw two 20% rallies in the S&P, while the 1969 inversion saw a handful of 10% bounces when the 10-year and 3-month spread was at a deep inversion.
“As we noted earlier in the week, the juxtaposition between the equity market’s post-CPI momentum spark over the last week vs. the shape of the yield curve message is disorienting,” Verrone wrote this week.
Given that the market is still likely in bear territory, these rallies aren’t out of the question, Krosby said. Investors participating for the long term, however, should proceed with caution, she said.
Those looking to get into this market should seek out companies with strong cash flows that can weather a recession, pay good dividends, and trade at attractive valuations, Krosby added. She pointed to energy and industrials, in particular defense, as some areas of the market that offer these qualities.
“Be aware of the fact that as long as the bear is alive, at some point the bear gets everything,” she said. “It’s very rare in a bear market that the bear doesn’t even affect those companies that we were in, we believe will protect us. At some point, the bear will get them too.”
— CNBC’s Michael Bloom and Gabriel Cortes contributed reporting
Vanguard says 60-40 investing strategy is not dead and will work out again for investors
PUBLISHED WED, NOV 16 20222:12 PM ESTUPDATED WED, NOV 16 20224:44 PM EST
After ugly losses in both stocks and bonds, many investors have written off the 60/40 investing strategy. But Vanguard says the market correction could help this tactic perform much like it has in the past.
The strategy is based on a portfolio with 60% of its assets in stocks and 40% in bonds. It has been a classic go-to for many investors, who expect it to provide growth and relative safety while generating steady returns. The 60/40 strategy is on track for its second worst year ever, down about 14.5% in 2022 as of Oct. 31, Vanguard found.
“Many investors or clients fear that what they have seen this year is the new normal. They fear that 60/40 doesn’t work anymore,” said Roger Aliaga-Diaz, Vanguard chief economist, Americas and global head of portfolio construction. The only worse year was 2008, when the strategy lost more than 20%.
Aliaga-Diaz said investors should not give up on the investment strategy. He expects after double digit losses this year, the strategy could produce 10-year annualized returns of 6.4% and get closer to a more normal level of 7% annualized returns further out in the future. From 1926 to 2021, the 60/40 portfolio generated annualized returns of 8.8%.
“We would say on a forward-looking basis the 60/40 looks more normal than not,” Aliaga-Diaz said.
Brighter prospects ahead
The beauty of the 60/40 strategy is that the two asset classes work as a hedge against the other. When stocks fall, investors often look to safety in bonds. In risk-on periods, investors favor stocks over bonds.
“Our point is, with this forward-looking projection, that the 60/40 can produce returns that are very similar, in line with where they have been in the past,” he said. “It’s been very painful…but on a forward basis we see much brighter prospects.”
Aliaga-Diaz said the strategy looks set to perform better because stocks are no longer as overvalued as they had been. The 60/40 portfolio also could benefit from the math of average returns which would suggest declines are followed by higher-than-average returns.
“Back in December 2021, equities were about 40% overvalued in our view. The ironic thing about this market collapse is, as painful as it has been, the forward-looking prospects are better,” he said. “Equity valuations are much more normal, though not normal yet. Some people say they are still 5% to 10% overvalued. But interest rates are much higher, too. The fixed income side of the portfolio should generate more income.”
Vanguard has funds based on the 60/40 strategy. One is the Vanguard LifeStrategy Moderate Growth Fund, which was down 18.4% for the year as of Oct. 31, its worst since 2008. That fund is recommended for a horizon of more than five years. Another is Vanguard Balanced Index Fund Admiral Shares. As of Oct. 31, it was down 17.39%. This marks the fund’s second worst year after the 22.12% decline in 2008.
This period has been extreme. “The bond losses have been so significant,” he said. “For 60/40, you have losses that are almost on par between bonds and equities. Equities were close to 18% down and bonds are slightly less than that… It’s almost like they’ve been reset… Now yields are at a much higher level, and valuations for stocks are at a much lower level, so prospects are better.”
According to Vanguard, stocks and bonds have declined together for brief periods. When viewed on a monthly basis, the nominal total returns of stocks and investment grade bonds have been negative nearly 15% of the time since 1976.
That would be the equivalent of a simultaneous decline in both asset classes every seven months on average. In an extended time period, the markets declined together less often. Over the last 46 years, there was never a three-year span of losses in both asset classes, according to Vanguard.
Drawdowns in 60/40 portfolios have been more frequent than simultaneous declines in stocks and bonds, due to the higher volatility of stocks and their greater weight, Vanguard found. One-month total returns were negative a third of the time over the past 46 years. One-year returns were negative about 14% of the time, or once about every seven years, on average.
‘Big Short’ Michael Burry on his current positioning: ‘You have no idea how short I am’
PUBLISHED WED, NOV 16 202210:36 AM ESTUPDATED WED, NOV 16 202211:23 AM EST
“The Big Short” investor Michael Burry, known for calling the subprime mortgage crisis, hinted that he currently has a sizable short position after being bearish throughout 2022.
“You have no idea how short I am,” Burry said in a Tuesday evening tweet.
It’s unclear what kind of bet Burry is making, if he’s shorting any specific sectors or stocks or just the whole market. It’s also not clear if Burry is implying he is betting against the market at all. The investor is known for his cryptic tweets and he routinely deletes them after posting.
Burry, who runs hedge fund Scion Asset Management, has been correctly warning investors about a severe market downturn on Twitter all year. He drew parallels between today’s market environment and that of 2008, saying it’s like “watching a plane crash.” Burry also sounded alarms on massive earnings compressions as well as “addictive” consumer spending amid soaring inflation.
The famed investor previously highlighted crashes in cryptocurrencies, meme stocks and SPACs this year. The crypto industry has been upended as fallout from crypto exchange FTX’s shocking Chapter 11 bankruptcy filing continued to drag digital currencies lower.
Burry said the stage might be set for gold to rally amid the turmoil in crypto.
“Long thought that the time for gold would be when crypto scandals merge into contagion,” Burry said in a tweet earlier this week.
The S&P 500 has rebounded in the past one month after falling into a bear market. The benchmark is still down more than 17% on the year.
A new regulatory filing showed at the end of the third quarter, Burry held relatively small positions in just six names. He picked up $10 million worth of Qurate Retail, owner of home shopping channels QVC and HSN, making it his second-biggest holding. In the second quarter, he had dumped nearly all of his holdings including Big Tech names Meta and Alphabet.
Short positions are not disclosed in quarterly reports.
Burry didn’t immediately respond to CNBC’s emailed request for comment.
Disney blindsided Chapek with CEO decision after reaching out to Iger on Friday
PUBLISHED MON, NOV 21 20229:43 AM ESTUPDATED 4 MIN AGO
- Disney’s board reached out to Bob Iger on Friday about coming back as CEO.
- Senior Disney leadership, including CFO Christine McCarthy, had concerns with Chapek’s management of the company.
- Chapek and his inner circle were caught off guard by the news, which broke Sunday night.
Disney chose to rehire Bob Iger as chief executive after receiving internal complaints from senior leadership that Bob Chapek was not fit for the job, according to people familiar with the matter.
The executive change came together quickly, blindsiding Chapek and his closest allies. Disney’s board reached out to Iger on Friday, without any other serious candidates in mind to replace Chapek as CEO, CNBC’s David Faber reported Monday, citing sources.
RELATED INVESTING NEWS
The board’s outreach to Iger and discussion to replace Chapek came after the board married internal complaints about Chapek’s leadership with concerns following Disney’s most recent quarterly earnings report, said the people, who asked not to be named because the discussions were private. One of the executives to express a lack of confidence in Chapek was Christine McCarthy, Disney’s chief financial officer, two of the people said.
McCarthy was Iger’s CFO before he departed as CEO in 2020, holding the role since 2015. She has an established relationship with the board given her longevity in the position, the people said.
A Disney spokesperson declined to comment. Chapek didn’t respond to a request for comment.
On Sunday, Disney said it would replace Chapek with Iger as chief executive, effective immediately.
Iger has agreed to serve as CEO through the end of 2024, and will earn a $1 million base annual salary, Disney said in a regulatory filing Monday. The compensation package includes an annual bonus target of 100% of his annual salary, with an annual target of $25 million for a long-term incentive award.
Chapek had a base salary of $2.5 million, with an annual target of $20 million, which was increased from $15 million when his contract was renewed earlier this year. He is reportedly in line to receive a severance package of at least $20 million.
Chapek had come under fire for his management of Disney in the last few years. Chapek was notified on Sunday night, Faber reported.
Chapek and his inner circle were caught off guard by the news, one of the people said. The status of Chapek’s right-hand man, Kareem Daniel, is murky and dependent on the direction Iger wants to take at the company, two of the people said. Daniel leads Disney Media and Entertainment, a division created through Chapek’s reorganization of the company. Iger has never been a fan of the reorganization, which has caused internal consternation for nearly two years.
Iger has consistently heard complaints from his ex-colleagues throughout the year about Chapek’s leadership style and decision to pull away budgetary power from Disney’s creative executives, according to people familiar with the matter. Several specifically noted Chapek’s plan to move 2,000 Disney employees from California to Florida, which was then delayed, showed a level of callousness toward employees’ lives that didn’t jive with Disney’s family-friendly culture.
While some internal CEO candidates were identified who might be able to take the job over time, the board didn’t want to put someone new in that position given all various pressures on the company, Faber reported.
Disney reported fiscal fourth-quarter earnings earlier this month, disappointing on profit and certain key revenue segments. The company had also warned that its strong streaming numbers would likely taper off in the future. Three days later, Chapek told executives that Disney would cut costs through hiring freezes, layoffs and other measures. The memo about cost-cutting led to some internal pushback against Chapek, one of the people said.
The company’s shares rose Monday following the news of Chapek’s replacement.
— CNBC’s David Faber contributed to this article.