The holiday season provided a boost to WarnerMedia’s HBO Max streaming services. It gained momentum by increasing the number of subscribers through the holidays despite an industry slowdown.
WarnerMedia is a mass media company owned by AT&T (NYSE: T), the world’s largest telecommunications company and the largest provider of mobile telephone services in the U.S. Notably, last May, AT&T inked a deal to sell off the WarnerMedia unit and merge it with media company Discovery (DISCA). The deal is on track to conclude in mid-2022.
December 2021 marked the most successful month in HBO Max’s 19-month history with the revival of its popular “Sex and the City” series and newly released films such as “The Matrix Resurrections” and “King Richard.”
HBO Max expanded its services from a single market, the United States, to 46 countries. During the December quarter, HBO Max began the rollout of its services in Europe, with launches in Spain and the Nordics. According to management, a global expansion is likely to continue this year, with the target of eventually reaching 190 countries.
At the end of 2021, HBO recorded 73.8 million subscribers to its streaming service and cable network, rising from 69.4 million in September. Markedly, this surpassed the company’s expectations of between 70 million and 73 million subscribers.
Encouragingly, WarnerMedia CEO Jason Kilar, said, “I do believe the ceiling on streaming services is much higher than we’ve seen to date.”
“This is going to quickly become, for storytelling companies, a three-horse race,” Kilar added.
Despite its record performance, HBO Max still lags behind its peers. Netflix (NASDAQ: NFLX) recorded 214 million subscribers, while Walt Disney’s (NYSE: DIS) Disney+ had 118 million subscribers.
Disney recorded slow growth in the fiscal fourth quarter, with Disney+ adding just 2.1 million in the October quarter. On the other hand, Netflix recorded a slump in the first half of 2021 but added 4.4 million subscribers in the October quarter, thanks to the success of the “Squid Game” series.
Wall Street’s Take
Recently, RBC Capital analyst Kutgun Maral maintained a Hold rating on AT&T stock and a price target of $30 (14.11% upside potential).
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 5 Buys and 5 Holds. The average AT&T price target of $29.56 implies 12.44% upside potential. Shares have lost 1.9% over the past year.
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into AT&T’s performance this quarter.
According to the tool, the AT&T website recorded a 6.32% increase in global visits in November compared to the same period last year. In contrast, a quarter-to-date comparison showed a decrease of 3% compared to Q4 2020, while year-to-date website traffic growth stands at 10.88%.
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