Stock Story -
What Happened: Shares of global entertainment and media company Warner Bros. Discovery (NASDAQ:WBD) fell 13.4% in the morning session after the company reported second quarter earnings results. Its EPS missed, and its revenue fell short of Wall Street's estimates. We note its operating margin was severely negative because of a one-time impairment charge. Overall, this was a weaker quarter for Warner Bros. Discovery.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Warner Bros. Discovery? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Warner Bros. Discovery's shares are somewhat volatile and over the last year have had 20 moves greater than 5%. But moves this big are very rare even for Warner Bros. Discovery and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 21 days ago, when the company gained 6.6% after the Financial Times reported that the company is exploring strategic options, including "selling assets or splitting its Max streaming service and movie studio businesses from its legacy TV networks." According to the reports, having the TV business handle the company's debt load will leave management with the option to explore more ways to accelerate growth in the fast-growing streaming & studio business. Such a move also provides more clarity to investors struggling to invest in both operating segments under a single parent.
Warner Bros. Discovery is down 39.6% since the beginning of the year, and at $7.05 per share it is trading 51.1% below its 52-week high of $14.42 from August 2023. Investors who bought $1,000 worth of Warner Bros. Discovery's shares 5 years ago would now be looking at an investment worth $237.45.
