Warner Bros. Discovery Stock Drops After Profit and Revenue Miss Estimates

Warner Bros. Discovery (WBD) shares dropped over 9% in intraday trading Friday after the entertainment giant’s earnings and revenue missed estimates, driven by a fall in advertising revenue and Hollywood strikes.

Warner Bros. Discovery reported a fourth-quarter loss of 16 cents per share, narrowed from a loss of 86 cents per share in the year-ago period but steeper than analysts anticipated. Revenue of $10.28 billion for the fourth quarter was down from $11 billion a year earlier, also missing expectations as TV advertising revenue declined and studio revenue dropped as a result of writers’ and actors’ strikes.

In a bright spot, the company said it gained new subscribers in the quarter, with 97.7 million streaming customers at the end of the period, up from 95.9 million reported in the previous quarter.

The latest results follow news of a potential merger with Paramount Global (PARA) that could add 63 million Paramount+ streaming subscribers to Warner Bros. Discovery’s 97.7 million. Paramount will report its fourth-quarter earnings next week on Feb. 28.

Warner Bros. Discovery CEO David Zaslav said the company was on a “clear pathway to growth,” generating $6.2 billion in free cash flow and paying down $5.4 billion in debt in 2023. The company also said it has plans to roll out its Max streaming service in key international markets.

However, the company declined to provide financial guidance for 2024.

Shares of Warner Bros. Discovery were down 9.7% at $8.63 as of about 3:30 p.m. ET Friday. They’ve lost more than 45% of their value over the past year.