Warner Bros (WBD) AI Stock Analysis

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Warner Bros

(NASDAQ:WBD)

Rating:64Neutral

Price Target:

$13.00

▲(7.00% Upside)

Warner Bros. Discovery shows a solid recovery in financial performance with strong revenue growth and improved margins. The earnings call was positive, highlighting subscriber growth and strategic achievements. However, the stock's high P/E ratio and lack of dividend yield, along with operational challenges and bearish technical indicators, weigh on its overall attractiveness.

Positive Factors

Revenue Growth

The box office performance of the films released in the second quarter drove substantial revenue growth for the studio.

Subscriber Growth

The company added 3.4 million subscribers in the quarter, aiming for continued growth as it scales the subscriber base to 150 million by the end of 2026.

Negative Factors

Advertising Revenue Drop

WBD's total advertising revenues fell by 9% year-over-year, reaching $2.2B.

Linear TV Decline

Linear TV faced a 9% revenue decline and a 24% drop in Adjusted EBITDA, impacted by increased rights fees and lack of major sports events.

Warner Bros (WBD) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$29.21B

Dividend YieldN/A

Average Volume (3M)64.73M

Price to Earnings (P/E)40.2

Beta (1Y)1.20

Revenue Growth-3.79%

EPS GrowthN/A

CountryUS

Employees35,000

SectorCommunication Services

Sector Strength90

IndustryEntertainment

Share Statistics

EPS (TTM)0.63

Shares Outstanding2,475,772,200

10 Day Avg. Volume43,403,186

30 Day Avg. Volume64,734,950

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap2.04

Enterprise Value/Revenue1.55

Enterprise Value/Gross Profit3.57

Enterprise Value/Ebitda3.19

Forecast

1Y Price Target

$13.92

Price Target Upside14.57% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering16

Warner Bros Business Overview & Revenue Model

Company DescriptionWarner Bros. Discovery, Inc. (WBD) is a leading global media and entertainment company that specializes in the creation, production, and distribution of a wide range of content across various platforms. The company operates in several sectors, including film, television, and digital media, and is renowned for its iconic brands and franchises. WBD's core products and services include feature films, television series, and digital content, catering to diverse audiences around the world.

How the Company Makes MoneyWarner Bros. Discovery generates revenue through multiple streams, primarily from its content production and distribution activities. The company earns money from box office sales of its feature films and licensing deals for television programming. Additionally, WBD benefits from subscription revenue through its streaming services, which include HBO Max and Discovery+, offering access to their expansive content libraries. Advertising sales from its networks and digital platforms also contribute significantly to its earnings. Moreover, the company engages in strategic partnerships and collaborations to enhance its content offerings and expand its global reach, further bolstering its revenue potential.

Warner Bros Key Performance Indicators (KPIs)

Any

Distribution Revenue

Distribution Revenue
Captures earnings from distributing content across various platforms, indicating the reach and demand for Warner Bros' content.

Chart InsightsWarner Bros. Discovery's Distribution Revenue shows a mixed performance across segments. The Studios segment experienced volatility with significant fluctuations, including negative values, indicating possible strategic shifts or accounting adjustments. Networks revenue is on a gradual decline, reflecting challenges in traditional media. In contrast, DTC revenue is steadily increasing, supported by strong subscriber growth and successful content strategies, as highlighted in the earnings call. The company's focus on international expansion and quality content is driving positive momentum, despite challenges in the U.S. market and rising sports rights costs.

Data provided by:

Main Street Data

Warner Bros Earnings Call Summary

Earnings Call Date:Aug 07, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 06, 2025

Earnings Call Sentiment Positive

The call was largely positive, with significant achievements in box office performance, subscriber growth, and Emmy nominations. However, there were challenges related to content licensing strategy, distribution deals, and churn management that need attention.

Q2-2025 Updates

Positive Updates

Warner Bros. Box Office Success

Warner Bros. became the first studio ever to open 5 consecutive films with more than $45 million in domestic box office.

HBO Max Subscriber Growth

HBO Max added more than 3.4 million subscribers in Q2 as it continues to launch in markets around the world.

Emmy Nominations Leadership

Warner Bros. TV led all studios in nominations and HBO set a new record with 142 nominations.

Debt Reduction Achievement

The company reduced its net leverage from over 5x to 3.3x, the lowest since their merger closed.

Ambitious Strategic Objectives

The company aims to deliver $2.4 billion in adjusted EBITDA in 2025 with a goal of reaching $3 billion. Also, the streaming business is on track to exceed $1.3 billion in adjusted EBITDA in 2025.

Negative Updates

Content Licensing Strategy Pressure

The company has shifted the mix between external and internal content sales, putting pressure on near-term financial results.

HBO Max U.S. Distribution Deal Impact

A legacy deal adjustment with a former affiliated party is expected to dampen revenue growth for a 12-month period until lapping the deal.

NBA Deal Financial Impact

The exit from the NBA deal will result in a net benefit but with some offsetting revenue losses from an EBITDA perspective.

Churn and Account Sharing Issues

The company is in the early stages of addressing unauthorized account sharing and is actively working on reducing churn.

Company Guidance

In the Warner Bros. Discovery Q2 2025 earnings call, the company highlighted several key metrics and strategic objectives. Warner Bros. achieved a milestone by opening five consecutive films with over $45 million in domestic box office. HBO Max added more than 3.4 million subscribers in Q2, aiming for over 150 million subscribers by the end of 2026. The Studios business is on track to deliver at least $2.4 billion in adjusted EBITDA in 2025, with aspirations to reach $3 billion. The Streaming business is expected to exceed $1.3 billion in adjusted EBITDA in 2025. The company's net leverage ratio improved, reducing from over 5x to 3.3x. Warner Bros. Discovery is also preparing to split into two independent publicly traded companies by 2026. Additionally, Warner Bros. TV led all studios in Emmy nominations, while HBO set a record with 142 nominations.

Warner Bros Financial Statement Overview

Summary

Warner Bros demonstrates a solid recovery in revenue and profitability in the TTM, with improved margins and a balanced leverage position. However, operational challenges persist, as indicated by the negative EBIT margin. The cash flow situation is stable but shows signs of stress with declining free cash flow.

Income Statement

Positive

Warner Bros shows a strong recovery in its TTM (Trailing-Twelve-Months) with a significant revenue growth rate of 26.3% and a positive net profit margin of 6.17%. The gross profit margin has improved to 52.74%, indicating efficient cost management. However, the EBIT margin remains negative, suggesting ongoing operational challenges. The EBITDA margin is healthy at 36.67%, reflecting strong earnings before interest, taxes, depreciation, and amortization.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved to 0.96 in the TTM, indicating a balanced leverage position. Return on equity is positive at 6.82%, showing profitability for shareholders. The equity ratio stands at 35.44%, suggesting a stable capital structure. However, the company has experienced fluctuations in equity and debt levels over the years, which could pose risks.

Cash Flow

Neutral

Operating cash flow is strong, but free cash flow has declined by 6.32% in the TTM. The operating cash flow to net income ratio is 0.41, indicating decent cash generation relative to net income. The free cash flow to net income ratio is 0.77, showing a good conversion of earnings to cash. However, the negative growth in free cash flow is a concern.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	38.44B	39.32B	41.32B	33.82B	12.19B	10.67B
Gross Profit	16.70B	16.35B	16.80B	13.38B	7.57B	6.81B
EBITDA	18.67B	-2.33B	6.38B	41.00M	3.65B	3.78B
Net Income	630.00M	-11.31B	-3.13B	-7.37B	1.01B	1.22B
Balance Sheet
Total Assets	101.73B	104.56B	122.76B	134.00B	34.43B	34.09B
Cash, Cash Equivalents and Short-Term Investments	4.89B	5.31B	3.78B	3.73B	3.90B	2.09B
Total Debt	34.63B	39.51B	43.67B	49.00B	14.76B	15.40B
Total Liabilities	64.38B	69.62B	76.28B	85.33B	21.03B	21.70B
Stockholders Equity	36.05B	34.04B	45.23B	47.09B	11.60B	10.46B
Cash Flow
Free Cash Flow	4.07B	4.43B	6.16B	3.32B	2.42B	2.34B
Operating Cash Flow	5.10B	5.38B	7.48B	4.30B	2.80B	2.74B
Investing Cash Flow	-643.00M	-349.00M	-1.26B	3.52B	-56.00M	-703.00M
Financing Cash Flow	-3.36B	-3.75B	-5.84B	-7.74B	-853.00M	-1.55B

Warner Bros Technical Analysis

Technical Analysis Sentiment

Positive

Last Price12.15

Price Trends

50DMA

11.95

Positive

100DMA

10.50

Positive

200DMA

10.46

Positive

Market Momentum

MACD

-0.04

Negative

RSI

51.57

Neutral

STOCH

78.59

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBD, the sentiment is Positive. The current price of 12.15 is above the 20-day moving average (MA) of 11.91, above the 50-day MA of 11.95, and above the 200-day MA of 10.46, indicating a bullish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 51.57 is Neutral, neither overbought nor oversold. The STOCH value of 78.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WBD.

Warner Bros Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NFLX	80 Outperform	$521.00B	52.25	43.55%	―	14.28%	46.86%
FOX	80 Outperform	$25.11B	10.99	19.96%	0.99%	16.60%	57.39%
DIS	78 Outperform	$211.53B	18.45	11.01%	0.85%	5.00%	144.65%
FOXA	78 Outperform	$25.11B	12.03	19.96%	0.91%	16.60%	57.39%
NWSA	71 Outperform	$17.66B	37.02	5.69%	0.67%	-11.42%	75.42%
WBD	64 Neutral	$29.21B	40.23	2.18%	―	-3.79%	―
Sector *	60 Neutral	$43.56B	4.52	-12.81%	4.07%	1.87%	-43.08%

* Communication Services Sector Average

Performance Comparison

WBD

Warner Bros

12.15

4.42

57.18%

NWSA

News Corp

29.66

2.02

7.31%

DIS

Walt Disney

117.64

28.61

32.14%

NFLX

Netflix

1,223.50

531.02

76.68%

FOXA

Fox

59.52

18.92

46.60%

FOX

Fox

54.40

16.64

44.07%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 23, 2025