Warner Bros. Discovery (WBD) stock is higher in afternoon trading Thursday as investors parse the company's first-quarter earnings report and news of a streaming bundle offer with Walt Disney (DIS).
In the three months ended March 31, Warner Bros. Discovery's revenue decreased 7% year-over-year to $9.96 billion. Its per-share loss of 40 cents from a loss of 44 cents in the year-ago period.
Free cash flow (FCF), which is the cash remaining after a company has paid its expenses, interest on debt, taxes and long-term investments to grow its business, showed a major improvement, coming in at positive $390 million compared with negative $930 million a year ago.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We are pleased with our progress in the first quarter as evidenced by strong results in important KPIs," Warner Bros. Discovery CEO David Zaslav said in a statement. “Importantly, we once again delivered strong free cash flow, even in our seasonally weakest FCF quarter."
The Q1 results came up short of analysts' expectations. According to CNBC, Wall Street was expecting revenue of $10.2 billion and a loss of 24 cents per share.
The bright spot for Warner Bros. Discovery was its Max streaming unit, which saw revenues increase "modestly" to about $2.5 billion, driven by a 69.9% increase in advertising revenue to $175 million. The unit added 2 million subscribers from the prior quarter to bring its total to 99.6 million.
"We will soon be rolling out Max to 29 countries across Europe, and the content lineup for Max over the coming year is one of our strongest ever," Zaslav said. "Warner Bros. Pictures also had a strong start to the year as the first studio to reach $1 billion in both overseas and global box office, and they have a great slate in the works."
Warner Bros. Discovery and Disney unveil streaming bundle
Another potential growth driver for Warner Bros. Discovery is the new streaming bundle offer that includes Max and Disney's Disney Plus and Hulu platforms.
The deal was announced Wednesday, May 8, and will be available in ad-supported and ad-free plans.
The bundle creates the "opportunity to drive incremental subscriber growth," said Zaslov in today's earnings call, adding that "this product will help increase retention and lower churn, and thus support higher customer lifetime values." He added that the bundle will be available this summer.
Where does WBD stock stand with analysts?
Warner Bros. Discovery shares have had a rough 2024, down 30% so far. Still, analysts are bullish on the communication services stock.
According to S&P Global Market Intelligence, the consensus analyst target price for WBD stock is $13.01, representing implied upside of more than 60% to current levels. Meanwhile, the consensus recommendation is Buy.
Related Content
-
5 Stocks to Buy for a Trump PresidencyThe race for the White House is heating up and these five stocks are set to benefit if Donald Trump claims victory.
-
6 Target-Date Funds to Buy For Your RetirementThese six target-date funds are good set-it-and-forget-it options that are a staple of retirement plans.
-
5 Stocks to Buy for a Trump Presidency
The race for the White House is heating up and these five stocks are set to benefit if Donald Trump claims victory.
-
Six Target-Date Funds to Buy For Your Retirement
These six target-date funds are good set-it-and-forget-it options that are a staple of retirement plans.
-
How to Deal With Inflation: Advice From a Financial AdviserHigher prices are hitting everyone, but if you're especially hurting, here are some ways that could help you to cope.
-
Stock Market Today: Dow Dives 410 Points After August Jobs MissA big slump in tech stocks thanks to Broadcom's post-earnings slide put pressure on the main indexes too.
-
Mixed Jobs Report Keeps Fed on Track for Rate Cuts: What the Experts Are SayingJobs Report The Fed will cut rates this month. The only question is by how much.
-
Apple Stock's a Buy Ahead of Apple Event 2024Apple stock is on Wall Street's radar ahead of the tech giant's annual September product event, which begins on Monday. Here's what analysts are saying and what you can expect to see.
-
UiPath Stock's Price Struggles Continue After Earnings: What to KnowUiPath stock has been a market laggard this year and losses are accelerating even after the company's beat-and-raise quarter.
-
Why Broadcom Stock Is Still a Buy After EarningsBroadcom stock is sinking Friday after the chipmaker's outlook fell short, but Wall Street remains bullish. Here's what they're saying.
