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3 Reasons to Hold WBD Stock Now Despite a 67.7% Year-to-Date Rally
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Key Takeaways
Zacks pegs WBD's third-quarter 2025 Studios revenue at $3.16B and Streaming at $2.74B, both up year over year.
The separation into Warner Bros and Discovery Global aims to sharpen focus but may pressure near-term results.
WBD's 67.7% rally and discounted valuation reflect progress in execution amid restructuring and competition.
Warner Bros. Discovery (WBD - Free Report) has experienced a remarkable 67.7% surge year to date, outperforming the Zacks Broadcast Radio and Television industry and the Zacks Consumer Discretionary sector, which have advanced 30.4% and 4.7%, respectively. The rally reflects improving investor sentiment driven by stronger content monetisation, steady progress in debt reduction and better operating efficiency. However, despite this momentum, sentiment remains cautious given ongoing restructuring and competitive pressures. Investors may prefer to hold their positions rather than add exposure while awaiting clearer catalysts and more attractive entry points ahead.
Year-to-Date Performance
Image Source: Zacks Investment Research
Streaming and Studios Show Strong Momentum
WBD’s growth strategy remains firmly anchored in its two core engines — Studios and Streaming — which together form the foundation of its long-term content monetisation model. Within Studios, WBD has rebuilt the production slate around quality, scale and efficiency, aligning creative and commercial teams to improve global coordination and profitability.
The division continues to benefit from a mix of established franchises and original IP, including Superman, Harry Potter, The Pitt, Sinners and A Minecraft Movie, complemented by an expanding pipeline that features Joker: Folie à Deux, Beetlejuice Beetlejuice, The Batman: Part II and The Conjuring: Last Rites, alongside new projects from DC Studios and Warner Bros. Animation. This deliberate shift toward fewer, higher-impact releases is designed to deliver more consistent returns across theatrical, licensing and downstream streaming windows.
The streaming business continues to evolve toward sustainable profitability. HBO Max is transitioning from subscriber-led growth to a profit-oriented model driven by advertising, pricing optimisation and geographic expansion. Ad-supported tiers, renewed U.S. distribution agreements and upcoming launches across Germany, Italy and the U.K. are expected to support margin improvement. The platform continues to benefit from its deep content synergy with Warner Bros. Studios, with series such as The Last of Us, The White Lotus, Abbott Elementary, Dune: Prophecy, Peacemaker and The Penguin reinforcing its premium positioning.
The Zacks Consensus Estimate for WBD’s third-quarter 2025 streaming revenues is pegged at $2.74 billion, up 4.1% year over year, while the consensus mark for studios' revenues is pegged at $3.16 billion, indicating a 17.8% year-over-year increase. These projections highlight WBD’s improving execution across content production and platform monetisation, underscoring steady progress across its core growth drivers.
The planned separation of Warner Bros. Discovery into two independent entities — Warner Bros. (Studios and Streaming) and Discovery Global (Linear Networks) — remains a major strategic step but introduces near-term uncertainty. The restructuring is designed to unlock value through clearer capital allocation and operational focus, though execution complexity could pressure near-term earnings.
In the second quarter, WBD completed tender offers and consent solicitations, retiring $17.7 billion of bonds and reducing gross debt by $2.7 billion, a meaningful step in deleveraging. However, the bridge-loan facility used during this process carries higher interest costs, adding roughly $80 million in quarterly expenses. Ongoing restructuring and transaction-related costs are expected to weigh on free cash flow until the separation is complete.
The Zacks Consensus Estimate for WBD’s third-quarter 2025 loss is pegged at 5 cents per share, improving by 3 cents over the past 30 days but still below the prior-year profit of 5 cents per share. The revision trend signals gradual recovery, yet near-term volatility is likely to persist until post-split earnings visibility improves.
Warner Bros. Discovery operates in one of the most competitive segments of the media landscape, where scale and diversified monetisation drive valuation. Netflix (NFLX - Free Report) dominates global streaming with more than 280 million subscribers, leveraging its international reach and advertising tier to sustain profitability. Netflix’s early-mover advantage and strong local-content pipeline have made it the benchmark for digital media efficiency. Disney (DIS - Free Report) remains equally formidable, monetising its franchises across theatrical, streaming and experiences to create high-value synergies. Disney continues to benefit from its integrated ecosystem linking Disney+, Hulu and ESPN+, which drives recurring engagement and cross-promotion. Amazon (AMZN - Free Report) , through Prime Video, competes on a different axis, embedding content within its broader membership ecosystem. Amazon’s deep pockets, advertising network and exclusive sports rights strengthen retention and brand visibility, while Prime Video’s global expansion underscores its long-term ambition.
Amid this competitive backdrop, WBD trades at a forward 12-month price-to-sales multiple of 1.17X, well below the Zacks subindustry and sector averages of 4.9X and 2.13X, respectively. In comparison, Netflix, Disney and Amazon trade at 10.43X, 1.96X and 3.06X, respectively, reflecting how peers command premium valuations supported by stronger earnings visibility and more diversified business models. Despite the sharp year-to-date increase in its share price, WBD’s discount reflects investor caution surrounding its ongoing separation, elevated financing costs and uneven free-cash-flow patterns, which continue to limit near-term multiple expansion and justify a hold stance until clearer catalysts emerge.
WBD’s Valuation
Image Source: Zacks Investment Research
Conclusion
WBD’s improving execution across studios and streaming, along with progress in deleveraging, underpins its long-term recovery potential. Yet, persistent competition and limited earnings visibility continue to weigh on sentiment. The stock trades at a meaningful discount to peers and the industry average, offering value but little near-term catalyst for re-rating. Until separation-related uncertainty clears and cash-flow trends stabilise, holding existing positions appears the most balanced approach.
Image: Bigstock
3 Reasons to Hold WBD Stock Now Despite a 67.7% Year-to-Date Rally
Key Takeaways
Warner Bros. Discovery (WBD - Free Report) has experienced a remarkable 67.7% surge year to date, outperforming the Zacks Broadcast Radio and Television industry and the Zacks Consumer Discretionary sector, which have advanced 30.4% and 4.7%, respectively. The rally reflects improving investor sentiment driven by stronger content monetisation, steady progress in debt reduction and better operating efficiency. However, despite this momentum, sentiment remains cautious given ongoing restructuring and competitive pressures. Investors may prefer to hold their positions rather than add exposure while awaiting clearer catalysts and more attractive entry points ahead.
Year-to-Date Performance
Image Source: Zacks Investment Research
Streaming and Studios Show Strong Momentum
WBD’s growth strategy remains firmly anchored in its two core engines — Studios and Streaming — which together form the foundation of its long-term content monetisation model. Within Studios, WBD has rebuilt the production slate around quality, scale and efficiency, aligning creative and commercial teams to improve global coordination and profitability.
The division continues to benefit from a mix of established franchises and original IP, including Superman, Harry Potter, The Pitt, Sinners and A Minecraft Movie, complemented by an expanding pipeline that features Joker: Folie à Deux, Beetlejuice Beetlejuice, The Batman: Part II and The Conjuring: Last Rites, alongside new projects from DC Studios and Warner Bros. Animation. This deliberate shift toward fewer, higher-impact releases is designed to deliver more consistent returns across theatrical, licensing and downstream streaming windows.
The streaming business continues to evolve toward sustainable profitability. HBO Max is transitioning from subscriber-led growth to a profit-oriented model driven by advertising, pricing optimisation and geographic expansion. Ad-supported tiers, renewed U.S. distribution agreements and upcoming launches across Germany, Italy and the U.K. are expected to support margin improvement. The platform continues to benefit from its deep content synergy with Warner Bros. Studios, with series such as The Last of Us, The White Lotus, Abbott Elementary, Dune: Prophecy, Peacemaker and The Penguin reinforcing its premium positioning.
The Zacks Consensus Estimate for WBD’s third-quarter 2025 streaming revenues is pegged at $2.74 billion, up 4.1% year over year, while the consensus mark for studios' revenues is pegged at $3.16 billion, indicating a 17.8% year-over-year increase. These projections highlight WBD’s improving execution across content production and platform monetisation, underscoring steady progress across its core growth drivers.
Separation Uncertainty Creates Near-Term Volatility Risk
The planned separation of Warner Bros. Discovery into two independent entities — Warner Bros. (Studios and Streaming) and Discovery Global (Linear Networks) — remains a major strategic step but introduces near-term uncertainty. The restructuring is designed to unlock value through clearer capital allocation and operational focus, though execution complexity could pressure near-term earnings.
In the second quarter, WBD completed tender offers and consent solicitations, retiring $17.7 billion of bonds and reducing gross debt by $2.7 billion, a meaningful step in deleveraging. However, the bridge-loan facility used during this process carries higher interest costs, adding roughly $80 million in quarterly expenses. Ongoing restructuring and transaction-related costs are expected to weigh on free cash flow until the separation is complete.
The Zacks Consensus Estimate for WBD’s third-quarter 2025 loss is pegged at 5 cents per share, improving by 3 cents over the past 30 days but still below the prior-year profit of 5 cents per share. The revision trend signals gradual recovery, yet near-term volatility is likely to persist until post-split earnings visibility improves.
Warner Bros. Discovery, Inc. Price and Consensus
Warner Bros. Discovery, Inc. price-consensus-chart | Warner Bros. Discovery, Inc. Quote
Competitive Pressures Limit Premium Valuation Potential
Warner Bros. Discovery operates in one of the most competitive segments of the media landscape, where scale and diversified monetisation drive valuation. Netflix (NFLX - Free Report) dominates global streaming with more than 280 million subscribers, leveraging its international reach and advertising tier to sustain profitability. Netflix’s early-mover advantage and strong local-content pipeline have made it the benchmark for digital media efficiency. Disney (DIS - Free Report) remains equally formidable, monetising its franchises across theatrical, streaming and experiences to create high-value synergies. Disney continues to benefit from its integrated ecosystem linking Disney+, Hulu and ESPN+, which drives recurring engagement and cross-promotion. Amazon (AMZN - Free Report) , through Prime Video, competes on a different axis, embedding content within its broader membership ecosystem. Amazon’s deep pockets, advertising network and exclusive sports rights strengthen retention and brand visibility, while Prime Video’s global expansion underscores its long-term ambition.
Amid this competitive backdrop, WBD trades at a forward 12-month price-to-sales multiple of 1.17X, well below the Zacks subindustry and sector averages of 4.9X and 2.13X, respectively. In comparison, Netflix, Disney and Amazon trade at 10.43X, 1.96X and 3.06X, respectively, reflecting how peers command premium valuations supported by stronger earnings visibility and more diversified business models. Despite the sharp year-to-date increase in its share price, WBD’s discount reflects investor caution surrounding its ongoing separation, elevated financing costs and uneven free-cash-flow patterns, which continue to limit near-term multiple expansion and justify a hold stance until clearer catalysts emerge.
WBD’s Valuation
Image Source: Zacks Investment Research
Conclusion
WBD’s improving execution across studios and streaming, along with progress in deleveraging, underpins its long-term recovery potential. Yet, persistent competition and limited earnings visibility continue to weigh on sentiment. The stock trades at a meaningful discount to peers and the industry average, offering value but little near-term catalyst for re-rating. Until separation-related uncertainty clears and cash-flow trends stabilise, holding existing positions appears the most balanced approach.
WBD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.