What Happened?
Shares of global entertainment and media company Warner Bros. Discovery (NASDAQ: WBD) fell 7.8% in the morning session after TD Cowen downgraded the stock from a "Buy" to a "Hold" rating, citing a less favorable risk-reward profile.
The analyst maintained a price target of $14.00. The downgrade follows a significant surge in the company's share price, which has gained 127% over the past year and is trading near its 52-week high. TD Cowen noted this run-up was fueled by unsubstantiated rumors that Paramount Skydance may be considering a bid for the company. The firm expressed concern that without a material acquisition, the shares could potentially fall back to the $11-$12 range, leading to the more cautious stance.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Warner Bros. Discovery? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Warner Bros. Discovery’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 14.2% as it continued the rally from the previous day amid reports that Paramount Skydance was preparing a takeover bid for the company.
The stock surged nearly 29% in the prior session after The Wall Street Journal reported that Paramount Skydance, backed by the Ellison family, was preparing a majority cash offer.
The proposed bid is reportedly for all of Warner Bros. Discovery, including its movie studio and cable networks. Fueling continued investor optimism, analysts weighed in on the potential deal. Needham & Company noted that a deal could be completed at a price above $16.80 per share and estimated that combining the two media giants could create $3 billion to $4.5 billion in cost synergies.
Warner Bros. Discovery is up 66.3% since the beginning of the year, and at $17.73 per share, it is trading close to its 52-week high of $19.46 from September 2025. Investors who bought $1,000 worth of Warner Bros. Discovery’s shares 5 years ago would now be looking at an investment worth $730.59.
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