Warner Bros. Discovery (WBD) is reportedly moving closer to a major company split, which could be announced soon. According to CNBC‘s David Faber, who cited people familiar with the matter, the media company is considering separating its linear cable networks from its studio and streaming service, Max. While Warner Bros. shares rose on the news, the company also reported disappointing first-quarter earnings that missed both revenue and profit expectations. However, its streaming division performed well, and Warner Bros. reaffirmed its positive outlook for that segment.
In addition to its potential split, Warner Bros. Discovery is taking new steps to boost revenue from its streaming platform, Max. The company recently launched the “Extra Member Add-On” in the U.S., which allows account owners to share access to users outside their household for $7.99 per month. CEO JB Perrette said that the company will initially remind users softly about password-sharing rules, but plans to become “more assertive” later in 2025 and into 2026.
This crackdown is expected to improve both subscriber growth and average revenue per user, like it did for Netflix (NFLX). Interestingly, Max now has 122.3 million global subscribers and added 5.3 million new users in the first quarter. As part of its password-sharing crackdown, Warner Bros. will monitor account usage with data from devices and IP addresses. In addition, the Extra Member Add-On is currently limited to direct subscribers in the U.S. and allows one additional account per subscription.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on nine Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average WBD price target of $12.47 per share implies 40% upside potential.
