What Happened?
Shares of global entertainment and media company Warner Bros. Discovery (NASDAQ:WBD) jumped 14.3% in the morning session after the company revealed plans to split its business into two separate units: Global Linear Networks and Streaming & Studios. This change aims to simplify the organization's structure and provide more clarity in each unit. Global Linear Networks will focus on generating profits and increasing free cash flow while Streaming & Studios will prioritize growth and returns on invested capital.
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What The Market Is Telling Us
Warner Bros. Discovery’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Warner Bros. Discovery and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 13.4% on the news that the company reported weak second quarter earnings results. Its EPS missed, and its revenue fell short of Wall Street's estimates. We note its operating margin was severely negative because of a one-time impairment charge. Overall, this was a weaker quarter for Warner Bros. Discovery.
Warner Bros. Discovery is up 6.4% since the beginning of the year, and at $12.41 per share, it is trading close to its 52-week high of $12.49 from December 2023. Investors who bought $1,000 worth of Warner Bros. Discovery’s shares 5 years ago would now be looking at an investment worth $383.50.
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