Warner Bros. Discovery Stock Plummets 9.7% in 2025 After Earnings Miss and Revenue Decline

Highlights

• Warner Bros. Discovery's stock dropped over 9% during intraday trading after missing earnings and revenue estimates due to declines in advertising income and disruptions from Hollywood strikes.
• The Max streaming service boosted its subscriber base to 97.7 million, surpassing previous quarter figures and analyst expectations.
• Potential merger talks with Paramount Global could combine Warner Bros. Discovery's 97.7 million subscribers with Paramount+'s 63 million, creating a streaming powerhouse.

Shares of Warner Bros. Discovery (WBD) experienced a significant drop of more than 9% in intraday trading on Friday, 2024, as the company reported earnings and revenue below market forecasts. This downturn was primarily influenced by a decrease in advertising revenue and ongoing writers' and actors' strikes in Hollywood.

The company posted a fourth-quarter loss of 16 cents per share, an improvement from a loss of 86 cents per share the previous year but still worse than analyst expectations. Quarterly revenue reached $10.28 billion, down from $11 billion in the same period last year, reflecting reduced TV advertising and studio income impacted by labor disputes.

On a positive note, Warner Bros. Discovery's streaming platform, Max, grew its subscriber count to 97.7 million by the end of the quarter, up from 95.9 million in the prior quarter, exceeding projections.

These results come amid news of a possible merger with Paramount Global (PARA), which could add 63 million Paramount+ subscribers to Warner Bros. Discovery's existing base, significantly expanding its streaming footprint. Paramount is set to release its Q4 earnings on February 28, 2024.

CEO David Zaslav emphasized the company's "clear pathway to growth," highlighting $6.2 billion in free cash flow generated and $5.4 billion in debt reduction throughout 2023. Additionally, Warner Bros. Discovery plans to expand its Max streaming service into key international markets.

Despite these initiatives, the company refrained from offering financial guidance for 2024.

As of approximately 3:30 p.m. ET on Friday, Warner Bros. Discovery shares traded down 9.7% at $8.63, marking a loss of over 45% in value over the past year.

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