Shares of Warner Bros. Discovery slumped 13% Friday after it reported fourth-quarter results that fell short of Wall Street hopes, despite becoming the first Hollywood entertainment giant to squeeze full-year profit from its streaming platform.
The stock fell $1.28, or 13.3%, to $8.28 in late morning trading, the lowest point the stock has hit since the 2022 merger that created the company. Shares started the session down 18% since the start of 2024 and down 38% in the 52 weeks.
Trading volume was heavy, with more than twice the typical number of shares traded in a full day changing hands in just the first hour of Friday’s session.
The company, which includes Warner Bros. Studios, CNN, HBO and the Max streaming platform, posted a significantly smaller loss of $400 million, or 16 cents per share, for the three months ending 2023, compared with a loss of $2.1 billion, or 86 cents per share, for the final quarter of 2022.
Revenue for the period fell 7% to $10.28 billion in revenue, down 6.6% from $11 billion the prior year.
Analysts had been expecting a loss of 11 cents per share on revenue of $10.23 billion, according to Zack’s Investment Research.
On the positive side, the company added 1.8 million subscribers to its streaming platforms in the quarter, ending the year with 97.7 million, though most of that increase came from the acquisition of Turkish streaming service BluTV.
Notably, the company posted a streaming profit of $103 million for all of 2023, and CEO David Zaslav said he expects streaming to continue to be profitable in 2024.
But investors’ response showed the negatives outweighed the positives.
Among the concerns, advertising revenue in the quarter dropped 9%, to $2.09 billion from $2.29 billion last year, including a 12% decline to $1.9 billion in the TV division.
In addition, studios revenue tumbled 18% to $3.2 billion.
“This business is not without its challenges,” Zaslav said during the conference call with analysts that followed release of the results. “Among them, we continue to face the impacts of ongoing disruption, and the pay-TV ecosystem and a dislocated linear advertising ecosystem. We are challenging our leaders to find innovative solutions.”
And while Zaslav acknowledged the studio side “really underperformed” in 2023, he was unable to point to many major “Barbie”-sized releases in 2024 and instead hyped a turnaround in 2025 with the DC reboot “Superman: Legacy.”
