WBD Stock Forecast & Price Target

Warner Bros. Discovery is poised for strong financial performance, driven by significant cash flow generation, which contributes to an improving leverage trajectory. The company's direct-to-consumer (DTC) segment is progressing toward profitable scale, with a target of at least $1.3 billion in EBITDA by 2025 and an ambitious goal of reaching 150 million subscribers by the end of 2026, supported by upcoming market launches in Europe. Additionally, the studio operations have shown substantial growth, highlighted by successful summer film releases that are enhancing profitability and viewer engagement with HBO Max.

Warner Bros. Discovery is facing significant financial challenges, highlighted by a 22% decline in network revenues primarily due to unfavorable comparisons with Olympic events and ongoing subscriber losses. The company reported third-quarter revenues of $9,045 million, representing a 6% year-over-year decrease, compounded by soft domestic advertising trends and the absence of key inventory like the NBA for monetization. Additionally, the outlook is clouded by multiple downside risks, including potential recessionary impacts on consumer spending, continued cord-cutting pressures, and execution risks in cost management and subscriber growth, all of which could adversely affect revenue and cash flow trajectories.