Warner Bros. Discovery Hit With a Downgrade at Bernstein

• Warner Bros. Discovery (NASDAQ:WBD) is set to release its quarterly earnings on May 8, 2025, with Wall Street anticipating an earnings per share of -$0.14 and revenue of approximately $9.59 billion.
• The stock price of WBD is near its all-time low, with a significant decline from its high in 2023, indicating potential volatility following the earnings report.
• Key financial ratios such as the price-to-sales ratio of 0.53, enterprise value to sales ratio of 1.40, and a debt-to-equity ratio of 1.16 provide insights into the company's valuation and financial health.

Warner Bros. Discovery, trading under the symbol NASDAQ:WBD, is a major player in the entertainment industry. The company is known for its vast portfolio of content, including movies, television shows, and streaming services. As WBD prepares to release its quarterly earnings on May 8, 2025, Wall Street anticipates an earnings per share of -$0.14 and revenue of approximately $9.59 billion.

The stock price of WBD has seen a significant decline, currently near its all-time low of $6.68, a sharp drop from its high of $16.14 in 2023. This decline has raised concerns about the potential for further decreases, with some speculating a drop to $5 following the earnings report. The company's price-to-sales ratio of 0.53 indicates that investors are paying $0.53 for every dollar of sales, reflecting a low valuation.

WBD's enterprise value to sales ratio is about 1.40, suggesting a moderate valuation relative to its sales. The enterprise value to operating cash flow ratio stands at 9.20, indicating the company's valuation in relation to its cash flow from operations. These metrics provide insight into how the market values WBD's sales and cash flow.

The company's debt-to-equity ratio is approximately 1.16, showing a moderate level of debt financing compared to its equity. However, the current ratio of 0.89 suggests potential challenges in covering short-term liabilities with short-term assets. This could indicate liquidity issues that may impact the company's financial stability.

WBD is currently experiencing losses, as highlighted by its negative earnings yield of -55.34% and a negative price-to-earnings ratio of -1.5. These figures reflect the company's current financial struggles, which may influence investor sentiment and the stock's future performance.

• Warner Bros. Discovery (NASDAQ:WBD) is set to release its quarterly earnings on May 8, 2025, with Wall Street anticipating an earnings per share of -$0.14 and revenue of approximately $9.59 billion.
• The stock price of WBD is near its all-time low, with a significant decline from its high in 2023, indicating potential volatility following the earnings report.
• Key financial ratios such as the price-to-sales ratio of 0.53, enterprise value to sales ratio of 1.40, and a debt-to-equity ratio of 1.16 provide insights into the company's valuation and financial health.

Warner Bros. Discovery, trading under the symbol NASDAQ:WBD, is a major player in the entertainment industry. The company is known for its vast portfolio of content, including movies, television shows, and streaming services. As WBD prepares to release its quarterly earnings on May 8, 2025, Wall Street anticipates an earnings per share of -$0.14 and revenue of approximately $9.59 billion.

The stock price of WBD has seen a significant decline, currently near its all-time low of $6.68, a sharp drop from its high of $16.14 in 2023. This decline has raised concerns about the potential for further decreases, with some speculating a drop to $5 following the earnings report. The company's price-to-sales ratio of 0.53 indicates that investors are paying $0.53 for every dollar of sales, reflecting a low valuation.

WBD's enterprise value to sales ratio is about 1.40, suggesting a moderate valuation relative to its sales. The enterprise value to operating cash flow ratio stands at 9.20, indicating the company's valuation in relation to its cash flow from operations. These metrics provide insight into how the market values WBD's sales and cash flow.

The company's debt-to-equity ratio is approximately 1.16, showing a moderate level of debt financing compared to its equity. However, the current ratio of 0.89 suggests potential challenges in covering short-term liabilities with short-term assets. This could indicate liquidity issues that may impact the company's financial stability.

WBD is currently experiencing losses, as highlighted by its negative earnings yield of -55.34% and a negative price-to-earnings ratio of -1.5. These figures reflect the company's current financial struggles, which may influence investor sentiment and the stock's future performance.

Warner Bros. Discovery (NASDAQ:WBD) has been downgraded from Outperform to Market-Perform by Bernstein, with the firm also slashing its price target from $10 to $8, citing a challenging road ahead for the company's recovery. The downgrade follows a disappointing Q2 performance where WBD missed key financial metrics, including a 6% decline in revenue, a 16% drop in EBITDA, and a 43% reduction in free cash flow year-over-year.

Bernstein analysts pointed to the company's struggles since the WarnerMedia-Discovery merger in April 2022, which has seen WBD's stock plummet nearly 70%, making it one of the worst performers in its sector. The firm expressed concern over the "secular challenges" WBD faces in its linear TV business and the company's inability to achieve necessary scale in its direct-to-consumer (DTC) segment. Additionally, the analysts noted increasing investor frustration over WBD's uncertain future, particularly given its declining EBITDA and elevated leverage ratio of 4x.

The potential loss of NBA broadcasting rights, a key component of TNT's programming for decades, was also highlighted as a significant risk that could further compound WBD's difficulties.

Warner Bros. Discovery Inc (NASDAQ:WBD) reported a significant second-quarter loss on Wednesday, attributed to a hefty $9.1 billion charge in its networks unit following the loss of NBA media rights.

Shares of Warner Bros. Discovery dropped more than 9% intra-day today. The entertainment conglomerate reported a loss of $4.07 per share on revenue of $9.71 billion, missing Street expectations of a $0.19 loss per share on revenue of $10.07 billion.

The widened loss stemmed from a $9.1 billion hit in its networks segment, exacerbated by a sluggish U.S. linear advertising market and uncertainties related to affiliate and sports rights renewals, including the NBA. Content revenue saw a 6% decline, with a notable 27% drop in EV TV revenue, driven by lower licensing sales.

Global direct-to-consumer (DTC) subscribers reached 103.3 million by the end of Q2, marking an increase of 3.6 million from Q1. The average global DTC revenue per user was $8.00, reflecting a 4% sequential increase in constant currency.

Despite these challenges, the company remains committed to exploring new bundling opportunities to expand the reach of its streaming service, Max. Warner Bros. Discovery emphasized that these initiatives and other strategic actions are expected to drive segment profitability in the latter half of the year and into 2025 and beyond.

Warner Bros. Discovery Inc (NASDAQ:WBD) reported a significant second-quarter loss on Wednesday, attributed to a hefty $9.1 billion charge in its networks unit following the loss of NBA media rights.

Shares of Warner Bros. Discovery dropped more than 9% intra-day today. The entertainment conglomerate reported a loss of $4.07 per share on revenue of $9.71 billion, missing Street expectations of a $0.19 loss per share on revenue of $10.07 billion.

The widened loss stemmed from a $9.1 billion hit in its networks segment, exacerbated by a sluggish U.S. linear advertising market and uncertainties related to affiliate and sports rights renewals, including the NBA. Content revenue saw a 6% decline, with a notable 27% drop in EV TV revenue, driven by lower licensing sales.

Global direct-to-consumer (DTC) subscribers reached 103.3 million by the end of Q2, marking an increase of 3.6 million from Q1. The average global DTC revenue per user was $8.00, reflecting a 4% sequential increase in constant currency.

Despite these challenges, the company remains committed to exploring new bundling opportunities to expand the reach of its streaming service, Max. Warner Bros. Discovery emphasized that these initiatives and other strategic actions are expected to drive segment profitability in the latter half of the year and into 2025 and beyond.

Warner Bros. Discovery, Inc. (WBD:NASDAQ), in particular, presents an interesting financial profile that could influence the success of the streaming bundle. Despite trading at a loss with a price-to-earnings (P/E) ratio of approximately -6.10, the company's price-to-sales (P/S) ratio of about 0.46 suggests that investors are paying significantly less for each dollar of sales, indicating potential undervaluation. Furthermore, the enterprise value to sales (EV/Sales) ratio of approximately 1.50 and the enterprise value to operating cash flow (EV/OCF) ratio of around 8.30 highlight the company's valuation in relation to its sales and operating cash flow, respectively. These financial metrics suggest that Warner Bros. Discovery is positioned to leverage its streaming services for growth, despite the challenges indicated by a current ratio of about 0.93, which points to potential short-term liquidity concerns.

Disney's CEO, Bob Iger, has expressed optimism about the future of streaming, identifying it as a key growth driver for the company. This strategic bundling of Disney+, Hulu, and Max could not only enhance growth prospects for Disney and Warner Bros. Discovery but also reshape the competitive dynamics of the streaming market. By combining their streaming services, both companies aim to capitalize on their existing subscriber bases and content libraries to create a more compelling offering that could attract a larger audience and drive further growth in the streaming industry.