Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Warner Bros. Discovery, Inc. (NASDAQ: WBD) is a global media and entertainment company. The Company operates through three segments: Studios, Networks, and DTC. The Studios segment consists of the production and release of feature films for initial exhibition in theaters, production, and initial licensing of television programs to third parties.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has corrected by 5.74% in the last six months as well as by 19.64% in past nine months.
• The stock is leaning towards the higher band of its 52-week range of USD 16.34 and 52-week low price of USD 8.82, with the current price near an important support zone of USD 10.00-USD 11.00.
• The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 53.97.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~36.80% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and Newhouse Broadcasting Corporation are the biggest shareholders, holding the maximum stake in the company at ~10.06% and ~8.13%, respectively.

1.4 Key Metrics:

Warner Bros. Discovery (WBD) has demonstrated a favorable trend in managing its balance sheet risk, evidenced by a decrease in the Debt/Equity ratio from 1.03x in Q3FY22 to 1.00x in Q3FY23. This reduction suggests a prudent approach to leveraging and improved financial stability. Additionally, WBD has outperformed industry benchmarks, achieving robust EBITDA margins of 26.1% in Q3FY23, surpassing the industry median of 16.3%. This exemplifies the company's efficiency in generating earnings before interest, taxes, depreciation, and amortization.

Moreover, WBD has exhibited remarkable growth in its financial performance over the past five years, with a Compound Annual Growth Rate (CAGR) of 37.62% in revenue and 25.95% in gross profit. This sustained upward trajectory reflects the company's effective strategies in expanding its top line and optimizing gross profit margins. The success in revenue growth underscores WBD's ability to capture market opportunities and adapt to evolving industry dynamics, while the consistent improvement in gross profit indicates operational efficiency and cost-effectiveness.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY23:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 5.74% in the last six months as well as by 19.64% in past nine months.
• The stock is leaning towards the higher band of its 52-week range of USD 16.34 and 52-week low price of USD 8.82, with the current price near an important support zone of USD 10.00-USD 11.00.
• The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 53.97.

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is December 20, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.