Warner Bros. Discovery, Inc. (WBD): A Bull Case Theory

We came across a bullish thesis on Warner Bros. Discovery, Inc. on High Growth Investing’s Substack by Stefan Waldhauser. In this article, we will summarize the bulls’ thesis on WBD. Warner Bros. Discovery, Inc.'s share was trading at $16.17 as of September 11th. WBD’s trailing and forward P/E were 52.16 and 39.06 respectively according to Yahoo Finance.

Warner Bros. Discovery (WBD) has finally turned a corner after years of painful restructuring following the 2022 merger, reporting its first positive net result in Q2 2025. For patient shareholders, the milestone was long awaited, though the path to value creation remains tied to the company’s upcoming breakup. By mid-2026, WBD will split into two listed companies: Warner Bros. “Streaming & Studios,” housing HBO, DC, film, TV, gaming, and the Max platform, led by CEO David Zaslav; and Discovery Global, a collection of linear networks including CNN, TNT, Eurosport, and Discovery+, headed by current CFO Gunnar Wiedenfels.

The separation is designed to unlock value by isolating high-growth streaming and studio assets from cash-generative but shrinking linear TV, supported by $17.5 billion bridge financing and bondholder approval of key contract changes. The transaction is structured tax-free, with Discovery Global initially retaining a 20% Warner Bros. stake to be monetized for debt reduction. Q2 results highlighted the contrasting narratives. Streaming & Studios delivered strong momentum, with 3.4 million net subscriber adds, growth to nearly 126 million subs, and major studio success driving $3.8 billion in revenue and $863 million in EBITDA. Strategic partnerships, such as HBO Max’s Viu deal in Southeast Asia, underscore WBD’s pragmatic global expansion.

Conversely, Linear Networks reported a 9% revenue drop to $4.8 billion, with EBITDA falling 24% as cord-cutting accelerates. Despite GAAP profit of $1.6 billion boosted by one-time restructuring gains, free cash flow fell to $702 million, weighed by taxes, interest, and separation costs.The upcoming split is the key catalyst, offering investors cleaner valuation comparisons: Warner Bros. alongside Netflix and Disney, and Discovery Global against Fox, AMC, and Comcast. With the sum-of-the-parts profile emerging, WBD could see significant rerating as the market begins valuing its high-growth and legacy businesses separately.

Previously we covered a bullish thesis on Warner Bros. Discovery, Inc. (WBD) by Kostadin Ristovski, ACCA in February 2025, which highlighted the company’s debt burden, IP portfolio strength, and potential divestiture of linear assets to accelerate streaming growth. The company’s stock price has appreciated approximately by 45% since our coverage. The thesis still stands as debt reduction and streaming momentum continue. Stefan Waldhauser shares a similar view but emphasizes the upcoming corporate split.

Warner Bros. Discovery, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held WBD at the end of the first quarter which was 64 in the previous quarter. While we acknowledge the potential of WBD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.