It should come as no surprise that entertainment giant Warner Bros. Discovery (WBD) is taking on password sharing on its streaming platform. When Netflix (NFLX) did likewise, it meant big success, so it should be little surprise to see Warner try to bottle some of that lightning for itself. But Warner investors were not exactly pleased, and sent shares down modestly in the closing minutes of Monday’s trading.
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While Warner was eager to show off the range of properties that viewers can only get on HBO Max, Warner also wanted to make sure that as few non-paying customers as possible could get in to get those properties to begin with. And Warner is reportedly planning “aggressive” measures to ensure that password sharers are out the door.
Warner has been engaged in testing, for the last several months now, that allows it to spot a “…legitimate user who may not be a legitimate user.” If that sounds like the kind of thought that gets you a long stay in a padded room, then brace yourself. Because formerly, those who might not have been legitimate got “fairly soft,” “cancelable” messages about their legitimacy. But now, they will face “…more fixed and such that people have to take action…” Current legitimate users expressed dissatisfaction, noting that they used their accounts in multiple places—like traveling—and thus expected this to be a problem going forward.
Shutting Down Lawsuits
Meanwhile, Warner is still fighting back against a shareholder lawsuit, and recently requested the courts to dismiss the suit. The case relates to Warner’s 2024 earnings reports, where it revealed a $10 billion net loss that included a $9.1 billion goodwill impairment to its Networks segment.
The issue that caused that catastrophic plunge was the declining state of linear television in general, along with “…uncertainty regarding NBA sports rights.” But Warner wants the case dropped altogether, noting that the statements it made about uncertainty were “self-evidently true” based on how it all turned out for Warner. The courts are considering the request, at last report.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on 10 Buys and eight Holds assigned in the past three months, as indicated by the graphic below. After a 62.59% rally in its share price over the past year, the average WBD price target of $13.71 per share implies 27.12% upside potential.
