Before its quarterly earnings report, Warner Bros. Discovery (WBD) stock bottomed at $14. Days before
the results, speculators bid the stock up to almost $18. The stock crashed by 16.53% on August 5, 2022,
down 16.53% on the day when the media firm revealed major issues.
Management dumped $3.42 billion in unique costs in the “kitchen sink” report. For example, its net loss
of $3.42 billion included over $2 billion in amortization of intangibles. It also booked $1 billion in
restructuring and other charges. In addition, it reported $983 million in transaction and integration
costs.
Original AT&T (T) shareholders who received the WBD stock stub are at a loss. T is the parent stock that
fell after the telecom firm posted weak cash flow. Investors expected WBD, with its prized HBO Max
unit, to report a more promising business model.
In the conference call, the company indicated a willingness to slash costs aggressively. It already
canceled Batgirl and Scoob projects. The company characterized them as streaming films that do not fit
the new strategic approach. Supporting those movies would have added more costs to Warner Media
Discovery.
Your Takeaway
WBD stock is a poor holding. Just as AMC Networks (AMCX) and Paramount (PARA) stock are weak, so
too is WBD stock. Avoid the sector for now.
