Shares of Warner Bros. Discovery WBD, -16.53% were falling more than 10% in premarket trading Friday after the media giant fell way short of revenue expectations and posted a sizable loss. Executives also offered various targets, including a goal for 130 million global subscribers in 2025 and at least $12 billion in adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) in 2023. Wells Fargo analyst Steven Cahall downgraded the stock to equal weight from overweight in the wake of the report. “WBD’s DTC [direct-to-consumer] outlook and 2023 Ebitda guidance indicates a company going through a lot of post-merger growing pains,” he wrote. “DTC is challenging enough for the peer group like DIS, CMCSA, NFLX, and PARA, and they’re not trying to simultaneously improve under-managed assets, integrate complex organizations, and aggressively deleverage.” He added that while he and his team “love the WBD collection of assets,” they have an “incrementally negative” view on the medium-term landscape for the company. Cahall lowered his price target to $19 from $42 on the stock, which has fallen 7% over the past three months as the S&P 500 SPX, -0.16% has inched up 0.1%.
