For the past few days, common stock A prices for Warner Bros. Discovery have dropped. According to NASDAQ, the company’s common stock value has gone from $17.48 (08/04/22) to $14.59 (08/05/22).

The sudden drop occurred once financial analysts reviewed and updated the stocks’ worth, shortly after Warner Bros. Discovery released their second quarter 2022 earnings report as well announcing that they will not be releasing several HBO Max exclusive films, such as “Batgirl”, sparking the movement #ReleaseBatgirl.

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The company’s earnings report press release starts with a headlined message from David Zaslav, the president and CEO,

“Since launching Warner Bros Discovery... (we) have more conviction than ever in the massive opportunity ahead. We have the most powerful, creative engine and bouquet of owned content in the world, as highlighted by our industry-leading 193 Emmy nominations… We intend to maximize the value of the content through a broad distribution model that includes theatrical, streaming, linear cable, free-to-air, gaming, consumer products and experiences and more, everywhere in the world.
We’re confident (that) we’re on the right path, to meet our strategic goals, and really excel, both creatively and financially, and couldn’t be more excited about the future of our company.”

The earnings report continues in providing the highlights: Though total reported revenue was $9.827 billion, they accrued a net income loss of $3.418 billion, amortization (Or delayed planned payments) of $2.004 billion, and gross debt of $53 billion. The previous earnings release from the first quarter reported an amount of $456 million for net income and $15.1 billion in gross debt.

This massive debt growth and delayed payments raise expectations for upcoming movies like Black Adam which is expected to “reboot the DC Universe.”

The released earnings presentation addressed this on slide 36 as being “Below Expectations”, where they claim the company focus had been temporarily askew; focusing on HBO Max so much that TV and Film licenses were not emphasized enough resulting in “Forgone Revenue”, approved budget increases on media projects with “unproven” financial returns and additional corporate expenses that exceeded their projections.

While the company portrays its attitude as confident, they’re also proving to be ambitious by releasing its target common stock goal with NASDAQ, setting its sights on a $24.50 price tag.

The company provided its first steps to remedying the situation on slide 37 of the earnings presentation as follows:

Shut-down of CNN+
Restructuring of content portfolio for scripted linear, kids & animation, direct-to-HBO Max films, and international
A more balanced approach to extend content licensing while protecting certain key properties
Implementing an HBO Max distributions strategy aimed at wider availability vs. retail-only
Greater accountability, alignment, and communication across businesses

Part of the restructuring involved changing up people in leadership roles, from old to new, but one of the greats, Alan Horn rejoined Warner Bros Discovery from retirement to help correct the course. During the earnings presentation’s Q&A, Variety reported Zaslav saying,

“(These) expensive films going direct to streaming- … we can’t find an economic value to it, so we’re making a strategic shift, we will fully embrace theatrical as we believe that creates interest and demand… and generates word-of-mouth buzz as films transition to streaming and beyond.”

This raises questions about what films would be affected; is it just DC films? Powerhouse performances like Mortal Kombat easily surpassed the film's costs of production in 2021 as same-day options of direct-to-stream content on HBO Max and for exciting munchie-infested theaters.

The Hollywood Reporter was quick to interview several analysts that had varying reviews determining a “maintained price” or “lowered price(s)” with rough estimates showing the loss of a dollar or much more per share of common stock A.

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