Warner Bros. Discovery stock price has crashed and is hovering near its all-time low of $6.68 after plunging to a high of $16.14 in 2023.
The WBD share price continued its sell-off this week after Donald Trump announced new tariffs on all foreign-made movies that could affect some of its titles like Dune, A Minecraft Movie, Supergirl, and JJ Abrams’ Next Feature.
This article explores what to expect ahead of Warner Bros. Discovery earnings scheduled for later this week.
Warner Bro. Discovery is facing challenges
The WBD stock price has retreated in the past few years as the company has started facing many challenges. Like other Hollywood studio company, it went through a prolonged strike that affected its slated productions and caused substantial losses.
It is also one of the most indebted companies in the media industry with over $36 billion in long-term debt, $6.9 billion in deferred tax liability, and $3 billion in capital leases. On top of this, the company has over $6.5 billion in other non-current liabilities.
Most importantly, Warner Bros. Discovery is one of the top companies in the television industry, where it owns companies like CNN, Discovery Channel, and OWN. All these brands are struggling to gain market share as demand for television content wanes and cable cutting continues.
WBD earnings ahead
The next important catalyst for the WDD stock price will be the upcoming quarterly earnings, which will provide more color about the state of its business.
The most recent financial results showed that most of its business continued struggling in the last quarter.
Its total revenue dropped by 2% in the quarter to $10.0 billion as its advertising business plunged by 12%. This segment may continue struggling as companies lower their marketing budget because of Donald Trump’s tariffs.
The distribution business was flat, with its revenue remaining at $4.91 billion, while the content revenue fell by 2% to $2.90 billion.
Warner Bros. Discovery also reported a net loss of $200 million, which happened because of a $1.9 billion acquisition-related amortization and restructuring costs.
Analysts will be watching the upcoming financial results, which will come out on May 8. The expectation is that its revenue dropped by 3.65% in the first quarter to $9.59 billion.
Its loss-per-share are expected to come in at 13 cents, an improvement from the 40 cents it lost last year. Still, there is a likelihood that the earnings will be lower than expected since it has missed in two of the last two earning.
The 25 analysts tracked by Yahoo Finance expect that its annual revenue will be $38 billion, down by 1.47% from last year.
Analysts are largely bullish on WBD stock, pointing to its cheap valuation, potential for spinning off its television business, and its debt reduction measures. Some of the most bullish analysts are from companies like Wells Fargo, Keybanc, Barclays and Raymond James.
The average WBD stock price forecast by analysts is $13, up from the current $8.37.
Warner Bros stock price analysis
The weekly chart shows that the WBD share price has remained under pressure in the past few years as it became one of the worst-performing companies in the media industry.
It has formed a descending triangle pattern whose lower side is at $6.97. This triangle is one of the most bearish patterns in the market.
WBD stock has formed below all moving averages. Therefore, the most likely scenario is where it crashes to the psychological point at $5, down by about 40% below the current level. A move above the upper side of the descending trendline will invalidate the bullish outlook.
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