WBD
Warner Bros. Discovery, Inc.$28.36
Sell
Target $23.11
Report: Mar 07, 2026Communication Services • Entertainment • Turnaround CandidateSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$28.36-18.5%
Rec: SellConviction: Low
Entry Target
N/A
N/A
Fair Value
$23.11
(19% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$30.00
52 Week Low$7.52
Avg. 3 Month Volume26.06M
Efficiency
LTM Gross Margin44.0%
LTM EBITDA Margin25.2%
LTM EBIT Margin9.9%
LTM Operating Margin2.0%
LTM ROA0.7%
LTM ROE2.1%
LTM ROIC8.5%
LTM ROCE4.2%
Capital Structure
Market Cap (MM)$68.1B
Enterprise Value (MM)$96.1B
Shares Outstanding2.48B
Total Debt (MM)$32.57B
Cash & Equivalents (MM)$4.57B
LTM Net Debt (MM)$28.00B
LTM Net Debt/EBITDA3.0x
Growth
TTM Rev. Growth-5.1%
Last 3-Yr Rev. CAGR3.3%
Last 3-Yr EBITDA CAGRN/A
Last 3-Yr EPS CAGRN/A
Valuation
Street Target Price$26.95
LTM EV/Revenue2.6x
LTM EV/Gross Profit5.9x
LTM EV/EBIT26.0x
LTM EV/EBITDA10.2x
LTM P/E93.7x
LTM EV/FCF31.1x
LTM P/FCF22.1x
LTM P/TB2.5x
LTM P/B1.9x
Dividend Yield0.0%
Payout Ratio0.0%
Executive SummarySituation: Current price is $28.36 versus fair value $23.11 (-18.5% expected return), and valuation confidence is stable. Debate: Bull case depends on Discovery Global spin-off Q3 2026 at 3.3x leverage unlocks linear cash flow ($6.4B adj EBITDA 2025), addressing market concern on conglomerate discount and covenant risks (1.8x coverage). Bear case centers on Liquidity crunch: $32.6B debt with $874M 2026/$8.9B 2028 maturities breaches covenants (3.0x coverage/4.5x leverage required) if linear ads fall >10% or FCF misses $3B. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Streaming inflection to $1.3B EBITDA (achieved 2025) with 150M subs via bundling/password crackdown; studios $2.5B EBITDA; $21B debt repaid (79% of $24B op cash); spin-off unlocks linear cash cow at sustainable 3.3x leverage.
Bear Case
Linear ad/TV structural decline (-21% YoY); razor-thin 2% op margins, 1.8x interest coverage on $32.6B debt; 401% dilution erodes EPS 80%; zero NLV ($0/share low-case); junk ratings (BB+/Ba1).
Key Catalysts
Mid-Term (6-18 months)Impact: High
Discovery Global spin-off Q3 2026 at 3.3x leverage unlocks linear cash flow ($6.4B adj EBITDA 2025), addressing market concern on conglomera...
Near-Term (0-6 months)Impact: Critical
Netflix $82.7B acquisition rumor post-split (Dec 2025 8-K +6%), forcing change of control or asset sale. Rationale: Addresses bankruptcy fea...
Long-Term (18+ months)Impact: Moderate
WBD trades near 52-week high $30 amid spin-off progress and Netflix rumor, but zero NLV demands monitoring liquidity vs. $874M 2026 maturiti...
Primary Risks
Concern: High
Liquidity crunch: $32.6B debt with $874M 2026/$8.9B 2028 maturities breaches covenants (3.0x coverage/4.5x leverage required) if linear ads...
Concern: High
Dilutive equity raise or failed spin-off delays deleveraging, eroding 80% EPS further amid 401% share growth.
Concern: Medium
Stewardship mixed: refreshed board (92% independent, 2025 adds Noto/SoFi CEO, Levin/Angi CEO) with restructuring experts (Merchant/Tanium ex...
Recent Activity
2025-12-05SEC Filing (8-K)
+6.28%Netflix to acquire Warner Bros. Discovery for $82.7 billion after separation of Global Networks division.
2025-10-21Press Release
+10.97%Warner Bros. Discovery Initiates Review Of Potential Alternatives To Maximize Shareholder Value
2025-08-08SEC Filing (8-K)
-8.01%Warner Bros. Discovery reported Q2 2025 earnings with $9.8B revenue, 125.7M streaming subscribers, and $1.95B Adjusted EBITDA.
2025-06-10SEC Filing (8-K)
+5.04%Warner Bros. Discovery announces separation into two publicly traded companies
2025-05-08SEC Filing (SC 13D/A)
+5.26%Warner Bros. Discovery and Discovery Lightning Investments amend Schedule 13D to report acquisition of Starz Entertainment shares following completion of corporate transactions.
Valuation Table
9.8/10Decision Grade
Scenario Range
$0
Bear
$23
Base
$34
Bull
$28