DIS - Warner Bros. Discovery: A Debt-Laden Mess Limping Into Recession (Rating Downgrade)
2024-02-19 23:53:22 ET
Summary
- Warner Bros. Discovery's debt problem is unlikely to improve until interest rates decline significantly, or the economy grows faster.
- A potential recession in 2024-25 could lead to a price war in the streaming industry, impacting Warner Bros. Discovery's sales and earnings.
- Technical trading momentum is weak, while management is searching for any way to redirect investor attention.
- I am downgrading my share rating to Sell, with a $5 price target later this year.
My last article on Warner Bros. Discovery ( WBD ), written in August 2022 here , explained the debt problem facing the company, which would be hard to overcome without lower refinancing/borrowing costs. Well, since then, interest rates have risen in America, and WBD has declined -29% in price. Just as I suggested, long-term gains and any type of outperformance in owning shares have failed to materialize, vs. the S&P 500 blue-chip average advance of +21% over the same span.
Seeking Alpha - Paul Franke, Warner Bros. Discovery Article, August 9th, 2022
