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Warner Brothers Discovery is a stock that I recently began buying. I stated on a recent post that I was making this investment largely because I see a lot of future growth in the company’s streaming platforms. The company recently had their first quarterly report since the $43 billion dollar merger that combined Warner Brothers with Discovery, and the quarterly report did not go so well.
The first piece of bad news is the fact that the company reported a $3.42 billion dollar loss this quarter. Now, some of this can be explained due to the merger itself, but this is definitely not news that is ideal at all.
Analysts were expecting the company to bring in $11.91 billion in revenue, but the company only produced $9.82 billion in revenue. I admit that I find this pretty surprising, as I did not expect them to miss on revenue.
The company did, however, beat expectations on number of subscribers added which is what I care about the most. The company added 1.7 million subscribers this quarter vs the 1.65 million that they were expected to add. My big bet on Warner Brothers Discovery is that HBO Max and Discovery+ will both grow into pretty big revenue producers for Warner Brothers Discovery although I believe that this will take quite a while.
One thing that this quarter has led me to believe is that there might be a few messy quarters for this company in the near future as the two companies continue to integrate.
The company is also in the news right now for slashing the releases of two upcoming movies. Batgirl and Scoob! Holiday Haunt have both been pulled from production. Batgirl, in particular, has allegedly been pulled after terrible test screening reactions, and it seems like Warner Brothers Discovery believes that it is best to just not release it.
Obviously as a shareholder of this company, I wish that their quarterly report would have provided higher numbers. The stock is down around 11% so far after hours based off of this news. I am, however, not very concerned. I invest for the long term, and I do not really care about short term performance. The thesis I published on this stock originally is still what I believe today, and until that changes, I will remain a shareholder. I am still in the positive on my investment although I would not be surprised to see that change. Long term, I still believe that this is a good market play.
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