Warner Bros. Discovery Stock Rises Then Dips In Nasdaq Debut; Wall Street Sees Upside, Weighs In On Streaming, Cable, Debt & Leadership
11.04.2022 - 21:31
/ deadline.com
Warner Bros. Discovery shares had a volatile debut, rising early in the session but heading lower as analysts dissected the newly combined entity following the deal’s close on Friday. Reports out today – and more will follow – range from a thumbs-up on WBD’s streaming, content and planned cost savings, to caution on its debt and its big portfolio of linear cable networks.
The stock opened at $24.08 and rose to $26.26 before settling. With several hours still left of trading, it’s currently changing hands at $23.78.
The broader market is down too and the merger mechanics may be part of WBD’s dip because the deal had AT&T distribute shares of the new WBD to AT&T stockholders, many of whom were expected to turn right around and sell them. That’s because AT&T holders, who ended up with 71% of WBD shares, like the telco for its dividend and WBD doesn’t pay one.
About 45% of AT&T shares are held by retail investors (or individuals, vs institutions). That’s high compared with about 20% for U.S. equities overall. And most institutional ownership is primarily by income funds that were also attracted by AT&T’s high dividend yield. That likely means “meaningful supply pressure” on the shares post-merger, said Evercore ISI analyst Vijay Jayant, as the “lack of a dividend at WBD could result in a substantial flow back of stock from existing AT&T shareholders.”
But it would be temporary. Longer term, Jayant is pretty bullish on the creation of the “second largest media company after Disney,” citing 2021 revenues of $46B, a content budget of over $20B annually supporting a library with over 200K hours of programming, and the assets to successfully compete in the global DTC business.
He touted the combination of HBO Max and discovery+ into a
The website celebfans.org is an aggregator of news from open sources. The source is indicated at the beginning and at the end of the announcement. You can
send a complaint on the news if you find it unreliable.