Stocks to sell

Don’t Be Surprised if Warner Bros. Discovery Stock Hits Another 52-Week Low Friday

Warner Bros. Discovery (NASDAQ:WBD) has experienced nothing but pain since it completed its merger on April 8. This week has been particularly gruesome for owners of WBD stock.

On Tuesday, the company warned about its 2022 profits while also suggesting the integration of WarnerMedia with Discovery Communications wouldn’t go as smoothly as investors would like. Its shares fell on the news. They’ve been falling ever since. On Wednesday, WBD hit a 52-week low of $18.20. A day later, it touched a low of $17.89.

In Friday’s pre-market trading, WBD points to an $18.40 open. However, S&P 500 futures are pointing to a lower open for stocks. It’s more than possible Warner Bros. Discovery will hit a 52-week low for the third consecutive day this week. Assuming it closes down on Friday, it will have closed in negative territory for four of five trading days.

Since the April 8 merger, WBD stock has lost 25% of its value.

I suppose that’s why InvestorPlace’s Dana Blankenhorn feels it looks cheap at current prices. He may well turn out to be correct. However, the shellacking WBD stock is taking could be seen a mile away. It should not surprise anyone who owns shares of Warner Bros. Discovery that the integration will be messy.

It also hasn’t helped that CNN+ shut down after only a month costing the company $300 million. I recently argued that the streaming news network’s shuttering was the least of its concerns. The move by Chip and Joanna Gaines from Discovery to HBO, in part because of friction between the power couple and WBD executive Kathleen Finch, is but one additional example of the messiness about to ensue.

And that’s without questioning why HBO, a platform for scripted television, would suddenly pivot to non-fiction unscripted shows like the ones the Gaines create. Or asking how WBD is supposed to deal with the massive amount of debt ($58 billion) that it’s been burdened with.

“Messy” is an understatement.

Therefore, I don’t think investors should be surprised if WBD hits another 52-week low today. So steer clear of WBD stock for now folks.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.