The last few days have been rough on Warner Bros Discovery (WBD) stock. The sea of red from the last five days in trading alone will demonstrate that point, and a look at the last year that cost it over 50% of its value will do the same. Now, CNBC suggests that the media giant could become a target for activist investors looking for more value out of the stock. Shareholders continued their sell-off as shares fell fractionally in Friday afternoon’s trading.
There are certainly reasons to take an interest in Warner. It has made great progress in subscriber growth for its streaming services, adding a hefty 3.6 million such subscribers in the last three months. Sustained profitability is starting to look like a greater possibility as well, even if the latest earnings report did not have much to offer but a lot of bad news.
And Warner is not above the idea of mergers and partnerships, a move that could help unlock some more value, especially given the landscape. In fact, a LendingTree study back in May declared that close to 80% of Americans believe fast food is a luxury due to how expensive it is. As a result, people are searching for value, and a merger that could provide this value with more entertaining content could prove a welcome addition to the field.
No Shortage of Problems
However, Warner has no shortage of problems right now. Its linear television networks are struggling, as is the case all over. Warner declared that its television assets are worth a whopping $9 billion less than they were two years ago.
Further, Warner is reeling from the loss of the National Basketball Association’s (NBA) content, a move it is trying to fix by suing to get that content back. While Warner noted that it didn’t absolutely need the NBA, its loss will assuredly be felt. Take all these factors together, and it becomes more than clear why activist investors may be looking for a way onto the board to try and turn the company around. Massive losses and very few bright spots do not add up to a recipe for confidence.
Is Warner Bros Discovery a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on 10 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 50.46% loss in its share price over the past year, the average WBD price target of $12.50 per share implies 77.3% upside potential.
