Warner Bros. Discovery (WBD -2.82%) was formed when AT&T (T 0.93%) merged with Discovery Inc. in 2022.
Warner Bros. was founded by Albert, Harry, Sam, and Jack Warner in 1923. It became synonymous with the film industry and the Golden Age of Hollywood. In 1979, Warner and American Express (AXP 1.25%) entered into a joint venture called Warner-Amex Satellite Entertainment. This allowed Warner to expand into cable channels like MTV and Nickelodeon, which are both now part of entertainment giant Paramount Global (NASDAQ:PARA). Warner Bros. later merged with Time Inc. to become Time Warner.
The Discovery Channel launched in 1985. It expanded rapidly and eventually went public in 2008 as Discovery Communications.
In 2018, Discovery Communications and AT&T bought out Time Warner along with another mass media company called Scripps Networks Interactive. These acquisitions became Discovery Inc. and WarnerMedia.
In the summer of 2021, after ongoing reports that AT&T was planning to divest its interest in WarnerMedia and merge it with Discovery Inc. to form a new publicly traded entity, it was announced that the new company would become Warner Bros. Discovery.
After Discovery shareholders also approved the merger, Warner Bros. Discovery began trading on the Nasdaq exchange on April 11, 2022.
Today, Warner Bros. Discovery boasts an extensive range of media, television, and streaming assets, including HBO and streaming services Max, HBO, CNN, Food Network, DC Comics, and more.
This article will explain how to buy Warner Bros. Discovery stock and some factors to consider before you invest.
How to invest
How to buy Warner Bros. Discovery stock:
Because Warner Bros. Discovery stock is publicly traded, buying shares is easy, provided you have a brokerage account. If you don't have a brokerage account yet, don't worry. Opening one is easy and takes just a few minutes.
Step 1: Open a brokerage account
If you want to open your first brokerage account, there are plenty of options to choose from. A few options include:
- Fidelity
- Charles Schwab (SCHW -1.34%)
- Robinhood (HOOD -0.14%)
- Interactive Brokers (IBKR -0.91%).
Most brokerages let you invest in a range of assets, including stocks, bonds, and exchange-traded funds. Many also allow you to buy fractional shares of stocks as well as whole shares.
Whether you're new to investing or thinking of switching brokerages, there are a few things to consider when choosing a platform:
- Commission-free trading and no account maintenance fees.
- Low investment minimums.
- Additional services the brokerage offers, like research tools.
Step 2: Figure out your budget
Whether you're planning to invest in Warner Bros. Discovery stock or another company, you'll need to work out a budget. Your budget should be based not just on how much money you have to invest, but also how much exposure you want to a particular stock.
It's wise to diversify your investments across a range of stocks in numerous sectors that you intend to buy and hold for a minimum of five years. No matter how much you have to invest, dollar-cost averaging your capital across multiple stocks is often the best way to grow your investments with time while ensuring you're not overly exposed to any one investment.
Step 3: Do your research
When you put your hard-earned cash into shares of Warner Bros. Discovery stock or any other company, you are becoming a part owner of that business. As part owner, you need to understand how the business makes money, what its competitive advantages are, what risks the business faces, and the strength of its balance sheet. You also should evaluate the company's financial history and industry to ensure it aligns with your risk tolerance level and financial preferences.
Step 4: Place an order
If you're ready to buy Warner Bros. Discovery stock, go to your brokerage's account order page and fill out the requested information. You will also need to ensure you have the appropriate amount of funds in the account to satisfy the order for shares that you're placing.
You'll need to search first for the stock ticker, which is WBD for Warner Bros. Discovery. The brokerage will ask for the number of shares you want to buy and/or the dollar amount you want to invest.
Once your order is filled out and ready to go, you will also want to decide whether to place a market order or limit order. In most cases, a market order is preferable, since that means that your transaction will go through immediately. If you place a limit order, this means you are deciding to buy the stock at a maximum price.
In some cases, this may mean the transaction does not proceed or it takes much longer to do so. For example, if you place a limit order for Warner Bros. Discovery stock for a maximum price that is below its current trading price, the order would not go through unless and until the stock goes to that level.
Stock
Should I invest?
Should I invest in Warner Bros. Discovery?
Warner Bros. Discovery stock may not be right for all investors, but for those with a healthy appetite for risk and the volatility of the streaming and media space, there may be opportunity in this stock. The stock has been beaten down heavily over the last few years since it made its public debut following the AT&T spinoff.
This is a function of multiple factors, including declining viewership of traditional cable TV networks, significant competition in the streaming space, slow growth across multiple core segments, and changes in spending by advertisers in the challenging macro environment.
The company has also struggled with tremendous debt, particularly as interest rates have maintained nosebleed levels. As a result, profitability has fluctuated dramatically.
Warner Bros. Discovery delivered full-year revenue of $41.3 billion in 2023, down 4% compared to the prior year. Revenue from its studios and networks divisions declined by respective amounts of 12% and 8% from the previous year. However, its direct-to-consumer segment, which includes assets like HBO and streaming services Max and Discovery+ saw revenues grow by 5%.
The company also generates considerable operating cash flow. In the full-year 2023, cash provided by operating activities totaled $7.5 billion. Warner Bros. Discovery also generated $6.2 billion in free cash flow in the 12-month period.
For investors who gravitate toward media and streaming services stocks, Warner Bros. Discovery presents an opportunity to become part owner of a mainstay business with an impressive portfolio of brands. The footprint of this business does lend potential over the long run, but investors shouldn't overlook the debt and profitability challenges the company is facing in the near term when determining their long-term investment thesis for the stock.
Profitability
Is Warner Bros. Discovery profitable?
Warner Bros. Discovery is not currently profitable under generally accepted accounting principles (GAAP). It generated a net loss of $3.1 billion in the full year 2023.
However, in that 12-month period, the company brought in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $10.2 billion. Broken down by segment, the studios, networks, and direct-to-consumer segments brought in respective adjusted EBITDA of $2.2 billion, $9.1 billion, and $103 million in that 12-month time frame.
Dividends
Does Warner Bros. Discovery pay a dividend?
Warner Bros. Discovery stock does not pay a dividend. The company generates significant revenue that outpaces many of its media rivals, along with generous cash flow. However, it isn't profitable.
It's unlikely that investors will see a dividend payout from Warner Bros. Discovery in the near future.
ETFs
ETFs with exposure to Warner Bros. Discovery
If you would like to have Warner Bros. Discovery stock in your investment portfolio but don't want to buy the individual stock only, you might decide that purchasing shares of an exchange-traded fund (ETF) is the best way to go. By investing in an ETF, you can gain exposure to Warner Bros. Discovery stock, along with a range of other publicly traded companies contained in the fund you choose.
Some ETFs that include Warner Bros. Discovery stock include the Vanguard Total Stock Market ETF (VTI -0.7%), the SPDR Communication Services Select Sector ETF (XLC -0.21%), and the Vanguard S&P 500 ETF (VOO -0.69%), the Vanguard Mid-Cap ETF (VO -0.36%), and the Invesco QQQ ETF (QQQ -1.29%).
Exchange-Traded Fund (ETF)
Stock splits
Will Warner Bros. Discovery stock split?
Warner Bros. Discovery has not entered into a stock split since it became its current entity following the merger and spinoff from AT&T in 2022.
Related investing topics
The bottom line on Warner Bros. Discovery
Warner Bros. Discovery has work to do to clean up its debt load and maintain consistent profitability. However, it generates considerable revenue compared to its broader industry rivals, and its cash flow generation is impressive.
Its extensive media properties that span traditional cable television to streaming networks have enabled it to expand its portfolio of intellectual property, including some of the most popular films and TV shows of the last decade. Rising interest rates, inflation, declines in ad spending by its media partners, and varying degrees of consumer spending in a tough economic environment have all affected its balance sheet, and many of these are factors that can ease with time.
No stock should represent more than 10% of your portfolio, and it's important to hedge your exposure to any stock you buy. If you have a well-diversified portfolio, a healthy degree of resilience to volatility, and the patience to buy and hold this stock for many years, a position in Warner Bros. Discovery stock might present an undervalued opportunity.
FAQ
Investing in Warner Bros. Discovery FAQs:
How do I buy Warner Bros. Discovery stock?
You can buy shares of Warner Bros. Discovery stock through the brokerage of your choice, in either fractional or individual shares.
Is Warner Brothers Discovery a good stock to buy?
Warner Bros. Discovery stock may not be right for every investor, and the types of stocks you buy will depend on your investment capital and the preferred composition of your investment portfolio. The company has struggled with growth and profitability in recent years, but its direct-to-consumer segment has provided a much-needed boost, and cash generation is strong. Its collection of assets, which include names like HBO, DC Comics, and streaming aggregator Max, are also key players in the industry.
How to buy shares of Discovery?
You can buy shares of Warner Bros. Discovery, which was formed by WarnerMedia's spinoff by AT&T and merger with Discovery, Inc. in April 2022.
Is Warner Bros. on the stock market?
Yes, Warner Bros. Discovery is publicly traded and any investor with a brokerage account can purchase shares.
