Warner Bros. Discovery (WBD) has witnessed a rollercoaster ride in the stock market throughout 2023. Although the stock saw a surge earlier in the year, it has since experienced a significant decline. Despite this, one of the company's top executives recently made a substantial purchase of shares.
In the first two months of 2023, Warner stock had an impressive year-to-date gain of 48%. However, since then, it has dropped by 14%, currently standing below its 52-week intraday high of $16.34 set on Feb. 27. Investors initially showed optimism regarding Warner's prospects following the merger of streaming brands HBO Max and Discovery+, as well as the introduction of new properties like the highly-anticipated Harry Potter game, Hogwarts Legacy.
As April arrived, Warner shares remained rangebound, leading to criticism of the rebranded Max streaming service for omitting the "HBO" name. In the following month, Warner's CEO, David Zaslav, faced backlash from students chanting "pay your writers" during his commencement speech at Boston University. This incident occurred shortly after the Writers Guild of America went on strike due to failed negotiations with the Alliance of Motion Picture and Television Producers, of which Warner is a member. In July, the actors' union also joined the strike. On August 3, Warner reported mixed results for the second quarter.
Amidst this turbulent period, Gerhard Zeiler, President of International at Warner Bros. Discovery, demonstrated his confidence in the company by purchasing 38,000 shares for $535,420 on August 7. With this acquisition, he now owns a total of 329,032 shares. Despite multiple attempts to gather a comment from Zeiler, Warner did not respond to the request.
The future of Warner Bros. Discovery remains uncertain as market conditions and labor disputes continue to impact its stock performance. However, Zeiler's recent purchase suggests that the company's top executives maintain a positive outlook on its long-term potential.
Zeiler's Stock Purchases and Warner's Second-Quarter Report
Zeiler, a prominent investor, made a significant stock purchase last August. He acquired 20,000 shares of Warner stock on the open market for a total of $293,800. With an average price of $14.69 per share, this investment showcases Zeiler's confidence in Warner's potential.
Following the second-quarter report, Barrington Research analyst James C. Goss analyzed Warner's performance. Goss reaffirmed his Outperform rating on Warner stock and set a price target of $18. However, he also pointed out the potential challenges that the TV studio could face due to ongoing strikes. These strikes have created uncertainty in the industry, particularly in relation to second-half trends. Goss emphasized that while there may be modest cost savings in the short term, Warner's management expects the strikes to negatively impact earnings before interest, taxes, depreciation, and amortization. Additionally, prolonged strikes and delays in film production could significantly affect the company's operational performance if there is a gap in the delivery and release of content.
It's important to note that "Inside Scoop" regularly covers stock transactions by various insiders, including corporate executives, board members, large shareholders, politicians, and other notable figures. These individuals are legally obligated to disclose their stock trades to regulatory groups such as the Securities and Exchange Commission.