UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

2. Warner Bros. Discovery, Inc. (NASDAQ:WBD)

Number of Hedge Fund Investors In Q2 2024: 48

Sector: Communication Services

Warner Bros. Discovery, Inc. (NASDAQ:WBD) is one of the biggest media and entertainment companies in the world. The firm operates through its well-known film production division as well as well-known media networks and channels such as CNN, HBO, and TNT. In terms of revenue, Warner Bros. Discovery, Inc. (NASDAQ:WBD)’s film and direct-to-consumer businesses account for 26% and 25% of its revenue, respectively. Its Networks business is the largest overall contributor, as it accounts for $10.3 billion of the firm’s $19.7 billion in revenue during the first half of this year. Consequently, Warner Bros. Discovery, Inc. (NASDAQ:WBD)’s fate and its hypothesis depend on the ability of Networks to retain and grow viewership and earn revenue as well. In today’s information and entertainment age which is dominated by social media and online streaming, the outlook is far from comfortably predictable for Warner Bros. Discovery, Inc. (NASDAQ:WBD) as a result. One way that the firm can thrive is by using its considerable resources to team up with other companies to expand users. This was also the case in September when Warner Bros. Discovery, Inc. (NASDAQ:WBD)’s shares soared by 10% after it announced a deal with Charter Communications to provide Discovery Max and Discovery+ to Charter consumers free of charge.

Longleaf Partners mentioned Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q1 2024 investor letter. Here is what the fund said:

“Warner Bros Discovery (WBD) – Media conglomerate Warner Bros Discovery was also a detractor in the quarter. The market disliked the company’s lack of guidance for 2024. While there are tentative signs that the advertising market is slightly improving, we understand why the market remains in show-me mode on this part of the business. The Warner Bros Studio has gone from a big hit with the Barbie movie last summer to some misses lately. As we have discussed before, April 2024 represents the two-year anniversary of Warner Bros and Discovery merging. After this date, the company will have more options to go more on offense. Unfortunately, this is overlooked in the near term by daily Paramount headlines. We are ready to see how the rest of this year plays out. WBD still generates substantial FCF and is de-levering its balance sheet rapidly. The company remains dramatically undervalued today, but we need to see more positives before increasing our position further.”