Entertainment giant Warner Bros. Discovery (WBD) made a move, not long ago, that was regarded as infuriating by some and a potential disaster by others. That move was connected to the movie The Day the Earth Blew Up, which reports call the first original and completely animated Looney Tunes movie. And while this movie was once thought lost forever, it made a comeback, and is now a surprising streaming hit. This unlikely and unexpected win was enough to send Warner shares on an upward tear, adding 3% in the closing minutes of Tuesday’s trading.
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The Day the Earth Blew Up was originally slated to be cut from production altogether, part of a series of cost-cutting measures at Warner. But then, a distributor—Ketchup Entertainment—stepped in to buy the rights to Warner’s about-to-be-abandoned property. Ketchup brought it out for theatrical release in March, and critics were pleased. So too were viewers, who showed up in droves to catch the unexpected fun. Now, it is one of the 10 most-streamed movies on HBO Max, despite only being available for a short time.
Bullish Projections
Meanwhile, analysts see what Warner has been up to of late, and like where all this is going. Reports note that Warner’s movie performance seems to be improving, and its plan to spin off legacy linear networks—not to mention quite a bit of the company’s debt—offers a much clearer path to reduced debt.
This should also, the reports note, open up a better route to specialize in the streaming and studio aspects, both of which are growth-oriented. That should give Warner a little more room to breathe, and a lot more room to succeed. Of course, there are still problems. Clear and obvious competition in the streaming market does not exactly favor Warner right now, and the concerns around CEO David Zaslav are also sticky. That is particularly so considering Zaslav was directly connected to the loss of The Day the Earth Blew Up to begin with.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on nine Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 50.14% rally in its share price over the past year, the average WBD price target of $12.82 per share implies 12.55% upside potential.
