Warner Bros. Discovery Stock To $17?

Our multi-factor assessment suggests that it may be time to sell WBD stock. We have, overall, a pessimistic view of the stock, and a price of $17 may not be out of reach. We believe there are several things to fear in WBD stock given its overall Weak operating performance and financial condition. Hence, despite its Low valuation, this makes the stock look Risky.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $59 Bil in market cap, Warner Bros. Discovery provides global multi-genre content across various platforms and languages, operating popular television networks in areas like survival, nature, home, food, travel, sports, and kids.

[1] Valuation Looks Low

This table highlights how WBD is valued vs broader market. For more details see: WBD Valuation Ratios

[2] Growth Is Weak

• Warner Bros. Discovery has seen its top line grow at an average rate of 17.2% over the last 3 years
• Its revenues have fallen -4.3% from $40 Bil to $38 Bil in the last 12 months
• Also, its quarterly revenues declined -6.0% to $9.0 Bil in the most recent quarter from $9.6 Bil a year ago.

This table highlights how WBD is growing vs broader market. For more details see: WBD Revenue Comparison

[3] Profitability Appears Very Weak

• WBD last 12 month operating income was $1.4 Bil representing operating margin of 3.7%
• With cash flow margin of 13.8%, it generated nearly $5.2 Bil in operating cash flow over this period
• For the same period, WBD generated nearly $485 Mil in net income, suggesting net margin of about 1.3%

This table highlights how WBD profitability vs broader market. For more details see: WBD Operating Income Comparison

[4] Financial Stability Looks Weak

• WBD Debt was $34 Bil at the end of the most recent quarter, while its current Market Cap is $59 Bil. This implies Debt-to-Equity Ratio of 56.7%
• WBD Cash (including cash equivalents) makes up $4.3 Bil of $101 Bil in total Assets. This yields a Cash-to-Assets Ratio of 4.3%

[5] Downturn Resilience Is Weak

WBD 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.

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 $23.88 on 26 November 2025 $23.88

 
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

 
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

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read WBD Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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