Warner Bros Plunges 7.12%—Can the 2026 Split Salvage Shareholder Confidence?

Summary
• Warner Bros Discovery (WBD) tumbles 7.12% to $11.015, hitting an intraday low of $11.00
• Q2 revenue of $9.81B beats estimates, but EPS of $0.63 falls short of $0.25 forecast
• Analysts flag weaker linear networks and streaming EBITDA guidance as key concerns

Warner Bros Discovery’s stock plunged to a 52-week low amid mixed Q2 results and analyst downgrades. Despite a revenue beat, earnings disappointment and revised guidance for linear networks triggered a sharp selloff. The stock’s 7.12% drop reflects investor skepticism over near-term profitability and the delayed 2026 corporate split.

Q2 Earnings Disappointment and Analyst Revisions
Warner Bros Discovery’s 7.12% decline stems from a combination of earnings underperformance and bearish analyst revisions. While Q2 revenue of $9.81B exceeded expectations, the EPS of $0.63—boosted by a $3B debt extinguishment gain—fell far below the $0.25 forecast. Analysts highlighted weaker-than-expected linear networks performance, with Bank of America’s Jessica Ehrlich cutting 2025 linear EBITDA by $350M due to tough comparisons and rising sports rights costs. The streaming segment, though growing subscribers, faces margin pressures under a restructured HBO Max deal. CFRA’s upward earnings revision to $0.35 for 2025 and $0.10 for 2026 contrasts with BofA’s reduced 2025 revenue forecast to $37.7B, signaling divergent views on the company’s path to profitability.

Options Picks for Volatility Play
• 200-day average: 10.17 (below current price)
• RSI: 36.22 (oversold)
• Bollinger Bands: Lower band at 11.70 (key support)
• MACD Histogram: -0.20 (bearish divergence)

Warner Bros Discovery’s technicals suggest a short-term bearish trend amid oversold conditions. The stock is trading near its 52-week low of $6.64, with the 200-day MA at $10.17 acting as a critical floor. For aggressive traders, the WBD20250815C11.5 and WBD20250822C11.5 options offer high leverage and liquidity.

WBD20250815C11.5
• Code: WBD20250815C11.5
• Type: Call
• Strike: $11.50
• Expiry: 2025-08-15
• IV: 39.34% (moderate)
• Leverage: 110.55% (high)
• Delta: 0.26 (moderate sensitivity)
• Theta: -0.028 (moderate time decay)
• Gamma: 0.507 (high sensitivity to price movement)
• Turnover: 9,931 (liquid)
• Payoff (5% downside): $0 (stock below strike)
This contract offers high leverage and gamma, ideal for a sharp rebound if the stock breaks above $11.50.

WBD20250822C11.5
• Code: WBD20250822C11.5
• Type: Call
• Strike: $11.50
• Expiry: 2025-08-22
• IV: 39.93% (moderate)
• Leverage: 58.18% (high)
• Delta: 0.335 (moderate sensitivity)
• Theta: -0.0207 (moderate time decay)
• Gamma: 0.407 (high sensitivity to price movement)
• Turnover: 2,915 (liquid)
• Payoff (5% downside): $0 (stock below strike)
This option balances leverage and liquidity, suitable for a mid-term rebound scenario.

If $11.70 (Bollinger lower band) holds, WBD20250822C11.5 offers a high-gamma play into the 2026 split optimism.

Backtest Warner Bros Stock Performance
Warner Bros. Entertainment (WBD) has historically shown resilience following a -7% intraday plunge. The backtest data reveals that the 3-day win rate is 50.63%, the 10-day win rate is 52.63%, and the 30-day win rate is 45.61%, indicating that WBD tends to bounce back over various short-term horizons. The maximum return observed was 0.95% over 53 days, suggesting that while the stock may not always immediately recover from such a significant dip, it often does so within a month.

Immediate Action: Target Key Support Levels
Warner Bros Discovery’s 7.12% drop has pushed it to a 52-week low, with the 200-day MA at $10.17 and Bollinger lower band at $11.70 as critical support levels. While the 2026 split remains a long-term catalyst, near-term risks include linear network weakness and streaming margin pressures. Investors should monitor the $11.70 support and the sector leader Disney (DIS), which fell 0.4% today. A break below $11.70 could trigger a test of the 200-day MA, offering a high-leverage entry for contrarian buyers.