TLDR
- Warner Bros. Discovery (WBD) stock jumped 10% after projecting strong streaming subscriber growth through 2025
- The company expects to reach at least 150 million global subscribers by end of 2026
- WBD’s Q4 revenue fell 2.5% to $10 billion, missing analyst estimates of $10.14 billion
- The company reported a Q4 loss of 20 cents per share versus expected earnings of 3 cents per share
- Needham analyst Laura Martin maintained a Hold rating, citing concerns about WBD’s competitive position and projecting flat revenue growth
Warner Bros. Discovery stock surged 10% following the company’s optimistic streaming subscriber growth forecast. This came despite reporting weaker-than-expected fourth quarter financial results.
The media giant announced it expects “strong streaming subscriber growth to continue throughout 2025.” WBD stated it has a “clear path to reach at least 150 million global subscribers by the end of 2026.”
This positive outlook for its streaming business overshadowed the company’s disappointing fourth quarter performance. WBD reported revenue of $10 billion for Q4, representing a 2.5% decline compared to the same period last year.
The Q4 revenue figure fell short of Wall Street expectations. Analysts had projected an average of $10.14 billion in revenue for the quarter.
WBD also missed earnings estimates. The company posted a loss of 20 cents per share for the fourth quarter. This contrasted sharply with analysts’ expectations of a 3 cent per share profit.
Despite these shortfalls, there were some bright spots in the financial report. The company’s Q4 EBITDA, excluding certain items, increased by 11% compared to the same period a year earlier, reaching $2.7 billion.
WBD also outlined plans to expand its Max streaming service to new international markets. The company aims to launch in Australia, Germany, and the UK in 2026.
Needham analyst Laura Martin has maintained a Hold rating on WBD stock. Her cautious stance reflects concerns about the company’s overall market position.
Martin projects flat revenue growth and continued negative earnings per share for the next two years. This conservative outlook contributes to her neutral position on the stock.
The analyst expressed specific concern about Warner Bros. Discovery’s competitive standing. She suggested that WBD may be “too small to effectively compete in the market,” with the possibility that the competitive gap could widen.
Advertising revenues for WBD saw a notable drop in the recent quarter. Content revenues also decreased, indicating challenges in key revenue streams for the company.
Martin’s assessment suggests that negative developments for WBD appear more likely than positive ones at this time. This perspective reinforces her decision to maintain a Hold rating.
Barclays maintained a Hold rating on the stock
Barclays also maintained a Hold rating on the stock with a $12.00 price target, according to the report. This aligns with the cautious market sentiment surrounding WBD.
The contrasting news of disappointing quarterly results alongside optimistic streaming growth forecasts has created a mixed picture for investors. The market appears to be giving more weight to future growth potential than current performance challenges.
WBD’s focus on streaming subscriber growth reflects broader industry trends. Major media companies continue to prioritize direct-to-consumer models as traditional revenue streams face pressure.
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