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

We came across a bullish thesis on Warner Bros. Discovery, Inc. on Investing With Purpose’s Substack. In this article, we will summarize the bulls’ thesis on WBD. Warner Bros. Discovery, Inc.'s share was trading at $18.29 as of October 16th. WBD’s trailing P/E was 62.06 according to Yahoo Finance.

Warner Bros. Discovery (WBD) has transformed from a struggling value trap into a potentially compelling turnaround and merger play. Following years of heavy debt, declining investor confidence, and post-merger restructuring, the stock surged nearly 30% in a single day on reports that Paramount Skydance (PSKY) is preparing a takeover bid backed by Oracle co-founder Larry Ellison.

The potential deal is strategically and economically sensible, with analysts at Needham projecting upside to $24.30 per share if $3–4.5 billion in cost synergies are realized. WBD’s fundamentals are stabilizing, with positive trailing twelve-month net income of $765 million, free cash flow of $4 billion, and revenues around $38 billion, although leverage remains significant at $34 billion net debt. Operational improvements, including a strong $5 billion operating cash flow, indicate the company is addressing its historical financial weaknesses, positioning it well for deleveraging and strategic opportunities.

Technically, WBD has broken out of a multi-year downtrend, clearing key resistance in the $13–14 zone, with near-term support at $14–15 and upside targets toward $20+, signaling a regime shift and renewed investor interest. Even if the acquisition does not materialize, the combination of improving fundamentals, stabilizing free cash flow, and technical momentum makes WBD an attractive entry point with favorable risk/reward dynamics.

If the Paramount Skydance bid proceeds, a takeover premium above $16.80 per share could accelerate upside toward the mid-$20s, unlocking shareholder value and positioning WBD as a consolidated Hollywood heavyweight. Overall, WBD represents a unique investment opportunity with multiple catalysts, from merger speculation and technical momentum to fundamental stabilization, offering investors significant upside potential while the market reassesses its prospects.

Previously we covered a bullish thesis on Warner Bros. Discovery, Inc. (WBD) by Kostadin Ristovski, ACCA in February 2025, which highlighted the company’s post-merger debt, streaming transformation, and potential divestment of linear TV assets. The company's stock price has appreciated approximately by 64% since our coverage. The thesis still stands as WBD’s content library and streaming growth remain valuable. Investing With Purpose shares a similar view but emphasizes the Paramount Skydance merger and technical breakout as a near-term catalyst.

Warner Bros. Discovery, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held WBD at the end of the second quarter which was 60 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.