WBD Up 61% In A Month. Do You Buy Or Wait?

Warner Bros. Discovery (WBD) stock is up 61.3% in 21 trading days. Already own the stock? Might want to consider booking some profit as there is risk – specific to growth, profitability, balance sheet and downturn resilience. Consider the following data:

• Size: A $47 Bil company with $38 Bil in revenue currently trading at $18.99.
• Fundamentals: Last 12 month revenue growth of -3.7% and operating margin of 2.5%.
• Liquidity: Has Debt to Equity ratio of 0.74 and Cash to Assets ratio of 0.05
• Valuation: Currently trading at P/E multiple of 61.2 and P/EBIT multiple of 13.8
• Has returned (median) 58.5% within a year following sharp dips since 2010. See WBD Dip Buy Analysis.

While we like to ride the momentum if the fundamentals check out – for WBD, see Buy or Sell WBD Stock – we are wary of bull traps. Specifically, it is worth trying to answer if things get really bad, and WBD drops 20-30% to $13 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

WBD stock has jumped meaningfully recently and we currently find it risky. This may feel like a caution, and there is significant risk in relying on a single stock. However, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Below are the details, but before that, as a quick background: WBD provides global content in about 50 languages across multiple genres and operates television networks including documentary, lifestyle, food, travel, and kids programming.

2022 Inflation Shock

• WBD stock fell 88.5% from a high of $77.27 on 19 March 2021 to $8.87 on 28 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $19.82 on 24 September 2025 , and currently trades at $18.99

 
2020 Covid Pandemic

• WBD stock fell 44.0% from a high of $32.77 on 16 January 2020 to $18.36 on 3 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 6 January 2021

 
2018 Correction

• WBD stock fell 45.0% from a high of $29.62 on 21 February 2017 to $16.28 on 14 November 2017 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 12 September 2018

 
2008 Global Financial Crisis

• WBD stock fell 64.9% from a high of $14.74 on 5 October 2007 to $5.18 on 24 October 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 16 September 2009

 
Worried that WBD could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.