2024-03-27 09:00:00 ET
Summary
- Warner Bros. Discovery's recent correction demonstrates a robust support at the $8s, triggering an improved margin of safety for value-oriented investors.
- Readers must also note that the media company has been reporting healthier balance sheet and narrowing losses/improving monetization, with a great D2C reversal expected in 2025.
- WBD's valuations are also discounted compared to its peers, despite the robust adj EBITDA and Free Cash Flows, allowing it to slowly weather the transition to a streaming-driven industry.
- Its bottom lines are bound to improve once the ad-supported D2C segment hits sustainable profitability as similarly reported by NFLX.
- As a result of the attractive risk-reward ratio, we are maintaining our Buy rating for WBD stock.
We previously covered Warner Bros. Discovery (WBD) in November 2023, discussing its oversold status, with Mr. Market overreacting to the D2C churn, as the ongoing strikes reduced its content launches, worsened by the subscription price hikes at a time of tightened discretionary spending.
However, we believed that the pullback provided opportunistic investors with the chance to load up, with us still maintaining our optimism surrounding its long-term reversal....
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Warner Bros. Discovery: Inherently Oversold Here - 2025 May Bring Forth A Great Upside