With a market cap of $26.9 billion, Warner Bros. Discovery, Inc. (WBD) is a leading global media and entertainment company, offering a diverse portfolio of content and brands across television, film, streaming, and gaming. Its extensive brand portfolio includes Warner Bros. Pictures, DC, HBO, Discovery Channel, CNN, Cartoon Network, and popular franchises such as Harry Potter, Game of Thrones, and Looney Tunes.
Companies valued at more than $10 billion are generally considered “large-cap” stocks, and Warner Bros. Discovery fits this criterion perfectly. The New York-based company operates through three segments - Studios; Networks; and Direct-to-Consumer (DTC), producing iconic films, television programs, and premium streaming services.
Despite experiencing a 13.9% decline from its 52-week high of $12.70, the cable TV channels operator has shown resilience, with its shares gaining 3.6% over the past three months. This performance outpaces the Communication Services Select Sector SPDR ETF Fund's (XLC) marginal rise during the same period.
In the longer term, WBD's shares have risen 3.4% on a YTD basis, slightly outpacing XLC's 2.5% gain. Over the past 52 weeks, Warner Bros. Discovery has soared 29.2%, contrasting with XLC's 21.7% return over the same period.
Since November 2024, WBD has been trading mostly above its 50-day and 200-day moving averages.
Despite missing estimates with a Q4 2024 loss of $0.20 per share and revenue of $10 billion, WBD shares rose 4.8% on Feb. 27 due to strong adjusted EBITDA of $2.7 billion, up 10.2% year-over-year. Investors were encouraged by the Direct-to-Consumer (DTC) segment, which added 6.4 million subscribers, growing total subscribers to 116.9 million and driving a 5% increase in DTC revenue to $2.7 billion. The Studios segment also impressed with a 15% revenue jump to $3.7 billion, driven by strong content licensing despite weakness in gaming.
Additionally, management’s focus on debt reduction, with net debt reported at $34.6 billion, and plans for international DTC expansion further boosted market confidence.
However, in comparison, rival Fox Corporation (FOXA) has outperformed WBD, gaining 11.2% on a YTD basis and a surge of 78.8% over the past 52 weeks.
Despite WBD's outperformance relative to the broader sector, analysts are cautiously optimistic about the stock's prospects. The stock has a consensus rating of “Moderate Buy” from the 25 analysts covering it, and it is currently trading below the mean price target of $12.69.
