Shares of media and entertainment major Warner Bros. Discovery (NASDAQ:WBD) are trending nearly 9% lower today after the company’s mixed second-quarter results were marked by a dip in its subscriber numbers.
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During the quarter, revenue increased by 1.5% year-over-year to $9.97 billion, landing in line with expectations. EPS of -$0.17, however, came in lower than estimates by $0.06. Notably, the company’s adjusted EBITDA surged by 22% to $2.97 billion and free cash flow came in at a healthy $2.06 billion.
Despite the success of Barbie, the Nun II, and the launch of CNN Max, a news streaming service, WBD’s number of DTC subscribers decreased by nearly 700,000 to 95.1 million. However, its average revenue per user (ARPU) increased by 6% to $7.82.
Along with higher Theatrical revenue, growth in the Studios segment was aided by higher Games revenue, driven by the performances of Mortal Kombat 1 and Hogwarts Legacy. WBD ended the quarter with a cash pile of $2.4 billion and $45.3 billion in gross debt. This points to a net leverage multiple of 4.2 for the company.
What is the Forecast for WBD Stock?
Overall, the Street has a Strong Buy consensus rating on Warner Bros. Discovery. After a nearly 13.5% price gain over the past month, the average WBD price target of $17.40 implies a further 49.9% potential upside.
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