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
-
Heirs Inheriting Crypto? Don't Make It a Headache for ThemIf you have cryptocurrency in your estate, you'll need meticulous plans and clear instructions to ensure beneficiaries don't lose out after you're gone.
-
DIY Retirement Planning: A Smart Move or a Risky Endeavor?You can cut the cost of retirement planning by doing it yourself. But for something this important, it might be wiser to call in the professionals.
-
Galentine's Day: A Time to Promote Financial Literacy Among FriendsHere are three things women can do to help their friends gain financial knowledge and confidence.
-
Stock Market Today: Markets Turn Lower on Nasty Inflation SurpriseEquities sold off after a hot reading on consumer price inflation pushed back rate cuts to autumn or year-end.
-
CPI Report Puts the Kibosh on Rate Cuts: What the Experts Are Saying About InflationCPI Consumer price inflation reared its ugly head to start the year, dashing hopes for the Fed to lower borrowing costs anytime soon.
-
These Two Issues Are Critical to Efficient Retirement PlanningYou're saving hard for retirement, but if you're not thinking ahead about taxes and the cost of health care, your savings — and your legacy — could be at risk.
-
How to Use Good Debt (While Identifying and Avoiding Bad Debt)Not all debt is bad, but knowing the difference between good debt and bad debt and how to use them can help you get ahead financially and stay ahead.
-
Stock Market Today: Markets Reflect Elevated UncertaintyInvestors and traders as well as CEOs and central bankers continue to adjust to a new administration in Washington, D.C.
