Warner Bros. Discovery stock declines after Q4 numbers, lack of guidance

Getty Images

Warner Bros. Discovery's stock price, already in the dumps, fell another 11% this morning after the company's latest quarterly numbers showed weak linear advertising and a struggling studio. But the clincher for investors may be what did not appear: the forecast for the full year of 2024.

The stock shed $8.50 late in the morning, as the lack of a number “challenges confidence,” Michael Morris of Guggenheim Partners said in a note.

“The results themselves weren't great,” he noted on CNBC, but they weren't that surprising. “I think what's surprising people now is the lack of guidance for the full year of 2024. This is a company that has historically given formal guidance for its next year.” In a call with analysts after the numbers, CEO David Zaslav and CFO Gunnar Weidenfels “talked about a number of qualitative factors, but “Without this quantitative commitment, it is difficult for investors to commit” as well.

With shares in the tank so far, Morris bought the stock at a 52-week range of $16.

WBD brass have been touting the turnaround since the closing of the Discovery and Warner Media merger two years ago, saddled the combined company with heavy debt. This has been paid for by free cash flow that rose last quarter.

Advertising declined 14% as linear TV viewers and advertisers continued to hesitate. The streamer lost money during the quarter but was profitable for the full year. The TV studio felt pressure from last year's Hollywood strikes, shutting down production. The movie studio had a bad quarter. News of the sports package with Disney and Fox didn't give the stock a boost. Regarding potential deals, the CEO said “we like what we have” and the bar is very high. The company was kicking the tires on Paramount.

On a call with analysts, CEO David Zaslav said the company has a “plan of attack” for 2024. But investors want a number.

Doug Kreutz of TD Coin headlined his reaction to the morning – “Studio pulls back Q4 results; management chooses not to provide explicit guidance for 2024. He noted that management provided a “reasonable degree of directional feedback.” He gave an “outperform” rating on the stock with Target price of $15.

“We understand that the environment is challenging,” Morris told CNBC. “We see consumer behavior and advertiser behavior. In the case of Warner Bros. Discovery, they have a plan” — to migrate the activity and economy to streaming. “But someone has to say at some point: This is what we think we're going to do next year.”