Warner Bros. Discovery officially announced a new streaming service named Max. This new player in the streaming universe was drafted to combine content from two separate platforms, HBO Max and Discovery+. But the stock market didn’t appreciate this release: WBD stock is down nearly 6%. However, analysts’ opinions about the stock remain pretty positive. Let’s try to figure out why experts believe WBD stock has a great future.
Warner Media stopped being a part of AT&T and teamed up with Discovery in the spring of 2022. There were two parallel existing streaming platforms, flagship HBO Max with expensive drama TV shows and Discovery+ with content you can watch on Discovery Channel, Animal Planet, TLC etc. Soon, it’ll be one platform. Actually, it has been known for some time but only now has the new name been revealed – Max.
And many market participants don’t like the fact that three iconic letters – HBO – have disappeared from the title. They became a symbol of quality content for the generation. For example, they appeared on the screen before the duh duh du-du duh duh in every single Game of Thrones episode. It might have been difficult to predict such a development, but some movements of the market or direct shares can be forecasted if special tools are used. One such tool is economic calendar – it helps you stay up to date with upcoming major economic events around the world.
After the announcement, WBD stock dropped markedly. You can clearly see how the trend changed on the chart below.
But the year-to-date chart shows fantastic growth. Even after the last drop.
Why did it happen? First of all, analysts considered this stock underestimated. Second, WBD uses a strategy based on cost-cutting, especially for marketing activities and content production. Management of the company reports that it will allow the business to breakeven soon. Streaming competitors are also losing large sums of money every quarter, and network TV results aren’t particularly impressive.
What's more, WBD regularly launches new releases that are discussed by everyone, like The Last of Us or a new project based on the Harry Potter universe. On the other hand, lower marketing spends may mean that Max will get new users less frequently. Although, certain increases in budgets will likely occur to promote the new service.
Analysts consider that Warner Bros. Discovery stock still has a lot of upside potential. The consensus forecast for WBD stock is +50% in the next 12 months. But if you wanna add these shares to your portfolio immediately, hold off and do some analysis first. Every successful trade requires your own research, especially given that the situation of the markets change every day.
