Warner Bros. Discovery stock price remains in a three-year consolidation as the company faces pressures left, right and center. WBD has remained inside the key support and resistance levels at $6.82 and $15.76 in the past three years. This price is about 85% below the highest level in 2021. So, what next for the WBD stock price ahead of earnings?
WBD has been under pressure
WBD is one of the biggest players in the media industry in the United States, where it competes with the likes of Netflix, Paramount, and Disney.
The company owns some of the most recognizable brands in the media industry in the US. Notable players in its business are Warner Bros. Pictures, HBO, CNN, Cartoon Network, TBS, TNT, and Discovery Channel among others.
WBD money in at least four ways. It sells advertising on its television business and provides subscriptions through its Discovery and its HBO solutions. Its studio business makes money through ticket sales.
Further, the firm makes money through distribution, where cable companies like Comcast and Charter Communications pay it to have its television channels on their network. This is a crucial part of its television business.
Warner Bros. Discovery’s business has gone through major challenges as its studios business disappoint and its television segment experiences weak users because of cord-cutting. Its streaming business is also significantly smaller than Netflix, a company that has over 300 million users globally.
Warner Bros. Discovery’s business has also gone through a major challenge as its debt load remains elevated. Its total debt load has remained at $40.2 billion, with its short-term debt totalling about $3 billion. Just recently, the company reached a deal to sell some music rights in a $1 billion deal.
Read more: Warner Bros stock a dirt cheap bargain or a value trap?
Warner Bros. Discovery earnings ahead
The next important catalyst fot the Warner Bros. Discovery stock price will be its financial results scheduled on February 27.
These results will provide more data about its business and whether it is stabilizing. The most recent numbers showed that the studios segment revenue dropped by 17% in the third quarter to $2.6 billion. This decline was driven by a 40% crash of its theatrical releases and a 31% retreat of games. It was offset by a 30% jump of its TV segment.
Its networks revenue increased by 3% to $5.01 billion as distribution, advertising, and content revenue rose slightly. The direct to consumer segment revenue rose by 9% to $2.63 billion.
Analysts expect the company’s revenues to come in at $10.16 billion, a 1.24% drop from a year earlier. That figure will bring the total annual revenue to $39.49 billion, a 4.42% decline from what it made a year earlier.
Fortunately, analysts anticipate that its business will stabilize this year, with the average revenue estimated to be $39.7 billion. It will also continue to narrow its losses this year.
Warner Bros. also has a potential catalyst in that it may decide to sell its networks division, a move that will leave it with the DTC and studios. That would help it to shed some of its slowing vcmpanies. Also, analysts expect that the WBD stock price will rise to $12.98 from $10.78 today.
Warner Bros. Discovery stock price analysis
WBD stock chart by TradingView
The weekly chart shows that the WBD share price has remained in a tight range in the past few years. It has remained in a consolidation between the support at $6.82 and the resistance at $15.75. That is a sign that it is in the accumulation phase of the Wyckoff Theory.
The stock has also moved slightly above the 50-week moving average. Therefore, the stock will likely have a strong bullish breakout soon. Such a move may push it to the resistance at $15.76, up by about 50% from the current level.
A move above that level will point to a WBD stock price surge to $24.85, the 23.6% retracement level, which is about 140% above the current level. This outlook will remain valid as long as it is above the support at $6.8. This is in line with my last Warner Bros. Discovery stock price forecast.
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