Media giant Warner Bros. Discovery (WBD) plans to invest $8.5 billion in a new film studio in Las Vegas, Nevada, contingent on the state offering the promised tax credits. The company said the launch of the Nevada studio is dependent on the approval of film studio tax credits proposed during the 2023 legislative session and due for a vote in the next state legislature in February 2025.
WBD is collaborating with the University of Nevada and Birtcher Development, a family-run real estate firm, to establish the new studio. The trio will lease and develop a film production and television show facility at the new studio that will be named “Warner Bros. Studios Nevada.”
WBD Plans New Studio Despite Challenges
Media companies are challenged by declining cable TV viewership and high production expenses. In its Q2 FY24 results released recently, WBD wrote down its legacy TV assets by a massive $9.1 billion owing to ongoing headwinds. The news of the new studio launch comes as a surprise, with moviemaking becoming a costly affair. The proposed tax incentive is one of the major driving factors for WBD’s decision to start a new studio in Las Vegas.
Warner Bros. Studios Nevada will be the only studio on the sprawling 34-acre campus at UNLV’s Harry Reid Research & Technology Park in Las Vegas. It will also be used for vocational training in filmmaking, internship programs, as well as job creation opportunities for both K-12 and higher education partners throughout the state.
Hedge Funds Offload WBD Stock
Amid the pending approval of tax credits and ongoing challenges, hedge funds are offloading WBD stock. According to TipRanks’ Hedge Fund Trading Activity tool, WBD has a Very Negative Hedge Fund Confidence Signal, as hedge funds decreased their holdings of WBD shares by 17.8 million in the last quarter.
Is WBD a Good Buy?
Wall Street remains divided on WBD stock’s trajectory. On TipRanks, WBD has a Moderate Buy consensus rating based on ten Buys, six Holds, and one Sell rating. The average Warner Bros. Discovery price target of $12.50 implies 60.9% upside potential from current levels. Meanwhile, shares have declined 31.7% so far this year.
