Warner Bros Q2 2025 Earnings Exceed Estimates, Maintaining Buy Rating and $14 Price Target

Warner Bros reported strong Q2 2025 performance, exceeding estimates in Networks and DTC segments, with adjusted EBITDA higher than expected. Despite revenue challenges, the company's overall financial health remains robust. Analyst Doug Creutz maintains a Buy rating with a $14.00 price target, citing strong box office performances and management's ambitious growth targets.

Warner Bros. Discovery (WBD) reported a robust performance for the second quarter of 2025, with adjusted EBITDA up 9% to $1.95 billion, driven primarily by growth in the streaming and studios segments [1]. The company's net income improved significantly, rising from a loss of $10 billion a year earlier to $1.58 billion. However, the earnings per share (EPS) came in at $0.63, significantly below the expected $0.25, leading to a substantial surprise of -352% and a negative market reaction [2].

Key Financial Highlights

- Revenue: WBD reported $9.81 billion in revenue, up 1% from the previous quarter, exceeding the forecast of $9.73 billion by $0.08 billion.
- EBITDA: Adjusted EBITDA increased by 9% to $1.95 billion, primarily due to growth in the streaming and studios segments.
- Net Income: Net income improved to $1.58 billion, compared to a loss of $10 billion a year earlier.
- EPS: EPS came in at $0.63, below the forecasted $0.25, marking a significant miss.
- Stock Price: The stock price of WBD fell by 7.98% in pre-market trading, closing at $13.19 after the earnings release.

Segment Performance

- Studios: The studios segment is on track to deliver $2.4 billion in adjusted EBITDA for 2025, driven by strong box office performances and critical acclaim for films like Superman.
- Streaming: The streaming division aims to exceed $1.3 billion in adjusted EBITDA in 2025 and reach over 150 million subscribers by 2026.
- Global Linear Networks: This segment saw a decline, partially offsetting the growth in other segments.

Market Reaction

The market reacted negatively to the EPS miss, with the stock price falling by 7.98% in pre-market trading. The stock closed at $12.79 the previous day and dropped to $13.19 in pre-market trading.

Outlook and Guidance

Looking forward, WBD aims to split into two independent publicly traded companies by 2026, targeting $3 billion in studio EBITDA. The company expects streaming revenue to reaccelerate in 2026, with plans for international market expansions and new content strategies.

Analyst Views

Analyst Doug Creutz maintains a Buy rating with a $14.00 price target, citing strong box office performances and management's ambitious growth targets.

Risks and Challenges

Potential macroeconomic pressures affecting advertising revenue, increasing competition in the streaming market, execution risks associated with international expansion, and challenges in content licensing and monetization strategies are among the risks WBD faces.

References

[1] https://www.marketscreener.com/news/warner-bros-discovery-ebitda-up-9-in-q2-ce7c5edfdc8bf722
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-warner-bros-discovery-q2-2025-sees-stock-tumble-despite-revenue-beat-93CH-4177562