(WBD) Warner Brothers Discovery: Another Bad ER, $90m Films and Streaming Services Canned for No Good Reason, and Multiple Other Headwinds For a Merger Going Terribly

Labubs · August 5, 2022, 6:53am

A day late with this maybe as it’s down 11% AH on yet another bad ER and some pretty heavy news, but playing ERs are risky anyway, this should (hopefully) set a trend for us tomorrow going into next week, next month, next Christmas? We’ll see, but ever since the merger this company has been dropping bad news and disappointment faster than my dignity leaving my body when ordering three Chik-Fil-A’s at the register alone.
It’s already fallen to $15.40 AH, but we should have some serious gravity on our side. Beginning of July to today pumped from $13-$17.50 with only four(count em, 4) red days. Lots of rosy promises that were effectively broken today. I know, hurr Stonks go up gotta come down etc, but that’s not even close to the only headwind for the company.

The quarterly report numbers as per Yahoo! Finance¹:

Revenue: $9.82 billion versus $11.91 billion expected

Total DTC subscribers: 1.7 million net additions versus 1.65 million net additions expected

In total, the company said it ended the second quarter with 92.1 million subscribers across its streaming platforms, up about 1.7 million from the first quarter. It expects to see 130 million global streaming subscribers by 2025.
The leadership team doubled down on the importance of high content spend, explaining that reducing churn remains the number one factor amid increased competition.

Kinda kicking myself, I honestly should have caught this one earlier, I had seen last night or the previous that a pretty damn big Batgirl film has been totally scrapped; this was a somewhat anticipated film with a budget somewhere between $75m-$90m. The reporters seem to like leaning towards $90m down the drain. Shelved, never coming out. This move was highly unusual, leaving both supporters and detractors of this project confused. A Scooby Doo holiday film in the middle of production was also tossed in the trash. The T.V. show Demimonde from J.J. Abrams that was set to debut on HBO Max is also officially scrapped. Add to the list LeBron James’ House Party which was supposed to drop on July 28th. All three were big budget projects in the middle-to-late stages of production.

Oh, and in a very strange move, at least SIX (6!) HBO MAX Originals have been removed from the app as well³. There is a show based on a hit video game called The Last of Us that is now being worried about in the media, will that get axed next?⁵ Potential catalyst, I don’t think it will, that’s generally very highly anticipated, announcements around that should be important. Not sure what they were thinking with these moves…oh wait, there’s this from newly seated CEO David Zaslav, he gave this genius remark in an article from CNBC today²:

This idea of expensive films going direct to streaming, we cannot find an economic case for it," Zaslav said. “We can’t find an economic value for it. And so we’re making a strategic shift.”

Maybe he’s right, with theatres opening it’s not such a preposterous idea, but I disagree. I think people have gotten used to streaming and would like at least the option of watching new releases on streaming. Everybody likes more choices than less. Top Gun: Maverick is a good counterpoint, (and I bet what got this guy hard for theatre releases), but of all the things in this bad report, streaming is the one that met or exceeded expectations! Then also scrapping a decidedly streaming-only TV show from a big budget director, and six existing shows with no good reason? Hmm…But wait! There’s more!

The company scrapped plans for an entire CNN+ streaming service, another confusing move given their annouced strategy and their finacial strengths and weaknesses. (Though honestly, thankfully this happened, streaming is becoming ridiculous lol)

They’ve also cut back on ‘scripted programs’ on TNT and TBS, leaning more into sports and ‘unscripted fare’ (things like 60 Minutes, Game Shows, Reality TV and the like). To me, all this says they don’t have or don’t want to spend the money to produce high quality fictional TV anywhere. It certainly doesn’t scream a newly merged company running smoothly to me. What I hear is “We can’t afford actors, directors, editors, and all the rest that goes into a high quality entertainment, but we can try to get some rights to show sports, maybe throw together some cheap game shows.”

For a technical note, RSI on the daily touched oversold today, and this sharp rise is bumping up against an area of support from May on all timeframes up to weekly (also slightly with some days after the 2020 COVID drop, two in particular wicked down big but closed at this level). Weekly is kinda a cup without a handle, but I don’t think we’ll have to worry about that just yet. Will re-evaluate if we somehow get a couple weeks of consolidation.

I roughly laid out some levels based on daily closes and/or clusters. Dark Blue is recent/2022, Very Opaque Orange is the COVID wicks, the last time the chart was at this level. Only on here to show that visually. Edit- I should have drawn the AH price on the daily charts, though for those not on TV it is there as a default showing bid. It’s the Dark Blue dotted full screen line at $15.40, it just doesn’t paint a price.

Dailies, the first is zoomed in from May til now, the second is all of 2022. Note RSI juuuust barely touching oversold, and MACD feels like it wants to flip red…(please chime in on anything else you may notice looking at the charts yourselves, this is the most basic of the basic as it’s 2am now lol)

Here is the 5m from today, there was some higher than usualy volume in morning and afternoon, with AH gap down…RSI etc is obviously showing overbought, so definitely not gonna rush into anything til there’s a confirmation of trend.

Options aren’t very expensive on this one at all, (as of close 8-4) sub $2 for ITM Sep. 17.5p, but trades in 2.50 increments. The puts obviously are looking a little sad on the chain currently, though tomorrow will change that (sadly for entries, hopefully there’s a pop back above $16 for an hour or day or two hah).
Top of the breakout range is around 14.50, so I’d imagine the 15p would probably get the most OI tomorrow and going forward followed by the 12.5p, I’m not sure on the 12.5p for now, as that low has not yet been created (I only consider staying away for now because the breakout range daily wick low is 12.77, and as mentioned a minute ago the safer ITM September 17.5s were less than $2 (ehh, well, at close, we’ll see what an 11% AH drop brings them to. The 15s will most likely be around there instead…maybe the 12.5s will have to be the way to go after all. We’ll see if thers any pullback).

Gonna keep an eye on this for a few days, see if it continues to straight drill or retraces and goes for a double top first. Nothing below to bounce off of, though if the market stays up it may get pulled along. Not 100% on that yet, literally just thought of this potential play three hours ago, so I need to see how it reacts to overall changes (this is part of SPY).

There are some better looking plays tomorrow 8-5 (I plan to look at YELP and/or DASH after reading JB’s post), though as for WBD I really don’t see where it might find a bounce in this ~ 1-2 dollar range though, there is nothing below til 14.50 even going back a few years, and the support there is only around a week or two’s worth. Hitting that sub-$13 may actually come very soon if the momentum continues (tomorrow? I don’t know, that may be too dramatic a move. Should be some retracements…). AH alone brought it to $15.40, we’ll see what happens in PM. Also not discounting calls off potential bounces from those levels, though if we fall through 12.75 things could get interesting. Hopefully there’s still some juice to be squeezed here, after reading this CEO’s quotes and plans, I do think there should be.

Footnotes/References

Yahoo Finance: Warner Bros. Discovery sinks on $3.42 billion loss, HBO Max restructuring plan revealed
CNBC:
Warner Bros Discovery's DC universe, and its direct-to-streaming strategy, are getting a reset
/Popculture.com (Video Ad Warning, annoying loud autoplay):
HBO MAX Just Axed Six Titles

4.See #3

Comicbook.com (shutup) Opinion Piece
/https://comicbook.com/gaming/news/the-last-of-us-tv-show-hbo-max-canceled-concerns-playstation/

Relevant Links (will update as needed):

Hollywood Reporter going for a positive spin on today’s report:
/Warner Bros. Discovery First Earnings Report as Combined Company

AdAge, from May 15…shows that the merger stumbled out of the gate, and the focus on ‘unscripted’ media was already being tossed around:
WARNER BROS. DISCOVERY HEAVILY PLUGS UNSCRIPTED IN ITS FIRST UPFRONT

Well, this ended up being a lot more than I expected, jeez, ya see one video on YouTube about $90m being burned haha…there’s honestly probably a lot more to be dug up, but it is 2am here, so I’m gonna call it here Will be watching a few tickers in the morning tomorrow, but this company now seems woefully misled, and should be interesting to follow. If anyone is familiar with WBD please do post!

Really interested to see if they manage to break 12.50, if the price does get down there and the action looks playable, I would probaly start opening straddles/strangles to hedge that level. Beyond the very recent and a few dips in the past, there really isn’t anything below since 2009. Feel free to chime in with thoughts or constructive criticisms (except that the day to buy was yesterday, that one I already know …let’s see what we can get from this going forward, in both directions over time)

Labubs · August 5, 2022, 2:15pm

Well, this continued to drop PM, but is somewhat reattached to SPY at the moment (this last candle pushing above 412 was not reflected in WBD,). Pushing up towards $15 but struggling with it for a second time, will watch SPY for a while before doing anything. The spreads on LEAPs and Novembers are atrocious but may be worthwhile to watch and try and get filled on, really don’t see too much positivity around this company and it’s decisions. Might be best to try and play news movements and the next ERs going forward. Personally definitely waiting longer to see if SPY pulls it up past $15 or $16 (if we end up running towards $420 today/next week).

Gonna be watching out for their bigger movie releases too.

Oct 21st- Black Adam

Nov. 23rd- Creed III

Dec 16th- Shazam sequel

Also Peacemaker Season 2 should drop sometime in winter, probably January or February.

Labubs · August 5, 2022, 4:52pm

So, seeing that these options actually moved with relatively little dollar changes in the underlying, various put strikes printed if bought around 10 or 11am. As it’s pretty much tied to SPY price action wise, this is extra interesting to know going forward. Will show more on that below, but first some more headwinds I hadn’t seen yesterday:

Another cancelled show, an article from yesterday I didn’t see. It was Ellen DeGeneres’ animated show, a result of HBO announcing they no longer have a focus on “Live actions kids and family friendly programming”.

So yeah, here’s the WeBull option charts on different strikes from today:

FDs:

Sep. 16th:

Jan. 2023, these did not move much, but they are LEAPs:

Now, this has had a huge % drop from yesterday, so IV is probably playing a role here. I’ll have to re-evaluate next week, but this could be a decent vehicle to cheaply play SPY movements while waiting on further catalysts. Interest status: piqued

Labubs · August 9, 2022, 10:48pm

Well, this has continued to drill quite a bit, with no real positive catalysts on the near term horizon. Their next big theatrical releases (what seems to be the new CEO’s major focus) begin trickling out around October with two DC films Black Adam and a Shazam! sequel. There’s also a Flash film set to release in 2023, but with that actor turning out to be a walking talking yikes, not too sure the turnout will be fantastic there. First half 2023 has a somewhat similar line up with Creed III and Aquaman 2 being the bigger ticket films, but from where I’m sitting their next ‘sure thing’ film is probably Dune 2, which is slated for Nov. 2023. Then a Wonka film in winter 2023, with Furiosa (Fury Road prequel, witness), a Godzilla vs. Kong sequel, and a Joker sequel in 2024.

The DC stuff that is coming are all very much second tier characters, so I’m not expecting anything like Marvel numbers out of them. Honestly, most of these titles are niche in their own different ways, feels very ‘plug into ___ fandom and press play’ to me. The ones that do feel like they have big number potentials are all 2023-2024…Dune: Part Two will almost certainly do extremely well, Furiosa and Joker 2 will have potential (once trailers drop for them there will be better gauge of audience excitement for both). These all may be some possible dates to aim LEAPs at, but let’s see a bottom found first before going there.

The options have been moving, no live positions for me yet, I wanted to watch first, plus with CPI and PPI tomorrow (and a personal trip this weekend), I haven’t taken anything at all this week. I will definitely be curious to see what tomorrow and the rest of the week brings though; we are near (not at) the bottom of the Bollinger on the Daily and not yet oversold on the RSI, which makes me wonder if this won’t make it all the way down to $10 or below… hoping CPI and PPI come out as expected or better so I can see how this holds up to a green day.

I do believe this still has some room to fall, so I will be looking towards buying some puts spread out over the next couple of weeks if no positive news drops. Was also lightly watching for some DWAC-like meme potential as the whole Batgirl shelving has been hailed as ‘Anti-Woke CEO literally destroys lib media’ by that side of YouTube/Twitter, but they don’t seem to be actually buying in…still, something to be aware of, potential sentiment-wise. Personally, I’ll be more watching for news around the DC films and other larger releases, and any more details on their streaming stuff for potential catalysts; but really I don’t see anything aside from TA that points to this doing anything else except continuing to drill out and find a bottom.

Labubs · August 15, 2022, 10:18pm

WBD has seen some green between my last post and now, but is sitting back at almost the exact same spot on the daily as it was on the last red day. Hoping that was a little
bull flag to cool off a bit. It’s not exactly tied to the market which is interesting, it’s kind of been doing it’s own thing. Hoping it doesn’t double bottom off this $13 level and we see a continuation downwards to the bottom of the Bollinger; I do have two 9/16 12.5 puts that are just about break even, but even a little dip below $13 would give em a nice bit of green to sell on, hoping to see $12.75 and $12.50 dug out for these two before going further out towards November or so with them. I still think this tests $10 before the year is out unless reception to this whole restructuring that’s In process does a complete 180 and people start viewing it all as positive growth…I don’t think that truly happens til a good ER with good guidance.

Unless layoffs are bullish again Though we did also get a PT slash to $17 from $22 from JPM this morning. I think that’s still on the high side for the next few months/year, I just don’t see where an extra $4/share is gonna come from right now…unless layoffs are bullish here (more free cash ). Gonna have to see.

Still not seeing very much to be bullish about and plenty to be bearish on, alongside the PT cut today WBD announced a 14% workforce layoff at HBO, which is a pretty big deal seeing as it was one of the parent companies. WBD and Paramount have also sold a 75% interest of The CW network to Nexstar Media Network (ticker #NXST… WBD and PARA will each retain 12.5%). All of these feel like ways to get those WBD numbers looking better for their next ER, time to see if the market buys any of it.

If tomorrow does see a reversal/double bottom I’ll probably think about taking a pretty short dated call (not FDs, but not far out either), and/or depending on the movement tomorrow and Wednesday I may average down on the puts once; but really I’m hoping to have sold these for profit before EoW without averaging down/adding to the position, theta starts getting noticeable second half of next week, and becomes very bad towards the end of it. Definitely don’t want to get pinched by an algo pop in the prime days to be selling these strikes off, though that last pop was pretty short lived…will be watching for >35m, preferably >40m volume days and what happens then with this ticker now that the initial ER drop came and it’s finding it’s price. We had those three lower volume green days, and back to normal volume on a red day today (all relative to the activity since ER dropped, those low vol green days were still higher or around the same as the usual vol before the mighty ER guh). I want to see that continue the rest of the week (hopefully red, but green would be helpful for data too, I just want to see how major the differences in price action and movement times are at different volume levels during normal trading, i.e. not immediately hot off a terrible ER)

One thing to note is liquidity is more than kind of shitty on some strikes, it took a few minutes to fill these and they had the 2nd highest put side OI on the expiration, so I’m hesitant to try and ‘ride’ calls intraday here in WBD specifically as a hedge in the event of a green day vs. just going to a bigger ticker with higher liquidity and movement on the options. If anyone else is playing or does play this, watch that OI and fill times and plan accordingly, it’s no blue chip or ETF, that’s for sure, lol. So far WBD seems to be looking pretty good for swings, intraday scalps not so much. And we’ll have to see what getting filled on selling these is actually like, I remember seeing some pretty wonky spreads on some strikes, especially near open. (Will need to watch that a bit more now that I’m home again, wide spreads at open was last week’s note).

Overall still mostly watching and getting a feel for how this goes, some days there’s a good bit of volatility, others the move is mostly over by 10am and it’s just flat/small trickle the rest of the day. As mentioned before I think that has to do with volume, on those three green days there was roughly half it’s typical post-ER volume, ~20m-30m, with it poking it’s head back above 40m today. We will see what the week brings! (Hopefully, carving out a level under the previous low of $12.77. That was before ER, it surprises me a bit we haven’t tapped it yet. Second test of $13 imminent ™️, let’s see that broken through)

News mentioned:

HBO Max feels brunt of layoffs at parent company : https://on.mktw.net/3JU68pd

Warner Bros. Discovery stock price target cut to $17 from $22 at J.P. Morgan: https://on.mktw.net/3w3Mbq6

Nexstar Media Group to acquire CW Network from pair of broadcast giants:
https://archive.ph/9WXsR

Edit- Went looking for some bull cases to check myself, this was the most bullish-ly spun version of the layoff news I could find (mentioning it as part of restructuring efforts), and the analyst in the article sums it about up-

The media giant reported a $3.42 billion loss in the second quarter, partly due to obstacles related to its recent merger.

It now expects 2022 adjusted EBITDA to come in between $9 billion and $9.5 billion, a decline from previous forecasts of $10 billion. Management also cut its full-year 2023 EBITDA guidance from $14 billion to $12 billion.

“This raises the question of what is the growth path for this company, because there’s no imminent catalyst,” Ranganathan warned.

She explained that the streaming business largely relies on future execution while the majority of the company’s revenues remain tied in its legacy TV business — a risk as consumers cut the cord.

“The end of 2022 and into 2023 — it looks pretty bleak,” the analyst continued.

Source: Warner Bros. Discovery has cut 14% of its HBO Max workforce, according to a new report:

Confirmation bias: engaged

Labubs · August 16, 2022, 3:38pm

Took 10% on the 12.5p as it was bouncing between ~12.85-12.95, as the downtrend of the day broke and it’s looking to reclaim $13 (~~though failing, so far~~ edit-seems to have reclaimed it as support around 11:40am, more than likely just running with market :pepedetective:). Seems it does generally reattach to market in absence of news. Could have bought these contracts multiple times up til 10am for better or same average while watching the lower high/higher low pattern forming; so maybe there is something to trading this intraday, especially if a round dollar level looks to be breaking one way or the other. Buuut…

Exit liquidity did suck as well. It will sit on the mid for a good 10 mins+ on a day like today. I’m waiting for FOMC to do anything else, but I’m hoping to see this continue to struggle with $13 for the week with maybe a small peek back above later on to enter some longer out positions, but back to watching this one now. Looked too much like those slightly imperfect almost double bottoms that have gotten me before/then a cup/whatever-you-wanna-call-it-but-looked-bullish-enough for me to take the few bucks out and wait for a new entry to present itself

Labubs · August 16, 2022, 5:20pm

This is on a fairly significant run up of it’s own now, pushing 13.50 at 12:30 (13.80 at 1:10, hm)…but I do not think I will be taking any more short (really probably not any) positions here til next week. Post FOMC at the very least for calls.

Considering a couple things currently: Sunday is the premiere of the Game of Thrones prequel+(student debt forgiveness+memes running hard this week=extra ~~retard~~ retail cash)+++some social media sentiment now shifting to 'actually look how undervalued WBD is trading compared to it’s book value", “This is a bargain with a P/B of only 0.5” (sentiment possibly most important this week, if people start running with these narratives) etc etc all add up to me not being comfortable taking a put this week.

Calls may work if that dip into the 12.80s truly does end up acting as a kind of double bottom on the high timeframes, all time low was 12.77 (post-merger, so price action here only goes back to early April)…but I’m not confident enough in the current positive movement to take a position just yet. Almost, but not quite there for me… FOMC first, then I want to see a sustained volume uptick with sentiment continuing to shift towards ‘undervalued bargain buy’ vs. ‘dead in the water merger’ before I’m ready to switch to calls and/or strangles.

If this does indeed continue to flip bullish and possibly even begins heading towards those $17-$20+ PTs, I’m certainly not averse to taking calls out on this… I wasn’t going short out of any particular love or hate for the company, was initially playing the ER fallout, but will continue to play what’s in front of me from here.

If I do start playing calls it will be after FOMC and if the overall market remains bullish, will be keeping an eye on twitter etc for more people spinning the ‘Buy the Game of Thrones excitement’/“This stock is 50%-75-100% below it’s actual value!” narratives and then looking for sustained volume coming in.

I do want to see nice and full engulfing candles on the daily on the way back up as well, too much wick/intraday volatility on this would not be very fun to play with the entry and exit times. Still recommend this more for swings, or at the very most day trading. Not really a great scalping ticker…(inb4 ‘hold my beer’, lol)

Tl;dr (I’ll try to do this more often, I know how much everyone loves Labubs is typing… ):

No calls til after FOMC, no puts til next week at the very least, watching if a long term double bottom off all time low actually was hit this morning in the $12.80s, and will switch to calls if bullish momentum continues; especially if this whole 0.5 P/B undervalued book sentiment picks up and/or people start buying in rest of the week for the Game of Thrones prequel. Careful of fill times/liquidity, good luck to all!

Labubs · August 16, 2022, 7:16pm

Interestingly, this was pulled up to +3.5% green with the market but as of 3pm, has not been pulled back down nearly as much as most of the rest. Ran to 13.88, fell to 13.50, bounced around 13.55 and seems like it has been trying to build out some support there. Daily candle is still engulfing yesterday, and the wick high is above Friday’s previous recent post-ER high.

I’m watching $14.25-$14.75 very closely. A daily close above $14.50 with continued momentum may just see this go for the $16.50 gap fill, but that’s a pretty tall order on such a minor sentiment turnaround. Then again, that recent PT downgrade was to $17… Either way, things here certainly got a bit more interesting today, I really want to see what happens when/if volume comes in now.

Tl;dr- Market pull stonk all the way up, but not pull it back down very much. $14.50 should be important.

Labubs · August 19, 2022, 10:13pm

Interesting to me that this was green on a red market day again, but volume here is still around the same, so this kind of barcoding between ~$12.80-$13.75 is probably to be expected. I alllmost picked up a call EoD yesterday just for this potential technical bounce, but did it on paper instead, I didn’t really want to hold something into an OpEx just for experimentation, plus I was pretty sure I wouldn’t be able to do much market-wise this morning.

So let’s see, the 9/16 12.5c closed at 1.20 yesterday, opened around the same today, and just closed at 1.63.

The 15s closed yesterday/opened today at 0.20, just closed at 0.36. Haven’t been looking too much further In or Out of the Money, 12.5 and 15 were the strikes with the OI, though right now the 9/16 17.5c and especially 20c are picking up a lot more. This resistance just under $14 is strong, but I’m starting to think the $12.75-$12.90 support is stronger. Starting to lean more and more bullish the more I think on all it, though the 10p still has the most OI of any single strike for September, 89k to the 20c’s 60k. October and November are beginning to pick up a bit as well, but still fairly low. Will begin watching them closer now that we’re heading into the final week of lower theta on the 9/16s, I won’t be interested in 9/16s very much in general seven days from now. Actual volume on all the strikes is still pretty abysmal though, even on the daily charts, so fills are probably still not the fastest. I haven’t really been paying the Weeklies much attention considering the Monthlies are already pretty slow to fill, I’m sure those Weekly strikes with three dozen OI would be super fun to try and play /s

If the pattern continues, all this is good to know for days we close or open at/under $13 but above $12.75, or else at/above ~$13.75 but still below $14 (Monday will show more here, still watching for a breakout and close above $14.25 or breakdown and close below ~$12.50). A close above $13.85, especially at or above $14 and I wouldn’t be holding puts til I knew if it was getting rejected or breaking through the following days. If 12.75 falls out definitively, it’s looking for a new bottom time. After observing this week, I’m not so sure that will happen anymore though (the why of that in a sec).

Today might have actually been scalpable, assuming the fills went alright (probably not compared to other plays…still think this will be better suited to swinging for now), but good to keep in mind if we continue getting strong opening trends.

So, why am I beginning to lean very, very slightly bullish? Beyond some analyst stuff and (lack of) PT updates, $12.85ish has been a tough support to crack to the downside, but it doesn’t really want to go too much higher than $13.85 either. This is starting to create a pretty defined wedge/triangle on the daily (post-ER). Sooner or later something’s gonna give, especially if a trend line from the pre-ER top right above the gap gets pulled into play as well.

To me, it seems like WBD is trapped between bad and worsening consumer sentiment while longer term investors may see growth opportunities coming from these cancellations, cutbacks, and layoffs. So, just barcoding…which I’m fine with honestly, calls right near $13 (right under even better) and puts right near $13.70 seem to be paying out well for the relative risk, so another week or two of that pattern would be fantastic for getting in here and overnighting relatively low risk positions. I’m definitely taking note that the more substantial moves having been happening first hour of market this week as opposed to most of it happening overnight the previous couple. Also worth noting today’s candle seems to be the most bullish one yet since the ER drop, no wicks, engulfed yesterday’s body and most of the wick, and closed only $0.13 lower than post-ER highs, coming off two bottom wick heavy bear flaggish red days. MACD is also approaching a cross back over on the Daily, though RSI remains mid-low. On the hourly it’s almost the opposite story with today’s move up, so it’s tough to call one way or the other beyond that it feels like mostly algos just throwing the ball back and forth. Missing: Cat(alyst).

No real news since I last posted, they’ve now also removed Sesame Street which is annoying parents (WBD have been saying they’re trying to shift away from the family stuff, let’s see how that works out for em’ Cotton); these are just a few observations at close looking at PA and whether or not options are actually profitable here. Seems that they are, so I’m actually rooting for another week or two of this back and forth barcode, once it breaks the pattern this will all change up and need heavier re-assessments, especially if it breaks downwards.

I say that because under $12.75 and that’s literally uncharted territory, a break above and we at least have a $17 PT from analysts (and that’s on the lower end) plus a gap to fill around $16.50. Curious actually as to why there haven’t been more PT downgrades/updates, some are still keeping this in their mid-$40’s ratings. I also want to figure out how and why it’s seemingly disconnected from the market (sometimes), and how to best use that info. Never thought I’d actually be rooting for a stock to keep barcoding for a while, haha.

Oh, and apparently last night Cramer called the rotten compost heap in his garden the “WBD Corner, cause that’s where you throw trash”. So WBD to $4000000 EoW /s.

I don’t believe in all that inverse Cramer stuff beyond a few funny coincidences, but enough people do that I figure it’d be worth mentioning. And, I mean, +4% on a market red day afterwards, sooo :dunno:…

Tl;dr- Not much change, still watching for <$12.75 or >$14.20ish for any major moves, but this is playable in the meantime. It’ll just be slower than a lot of other plays, but that’s fine if it’s consistent…Hoping the patterns/barcodes do continue, as the options have been moving roughly 35%-90% overnight in this PA (while also being at prices and in a pattern where an average down and hold for 3 days isn’t the end of the world). The support/resistance is pretty strongly set for now.

However, the daily looks like it wants to approach a breakout from the wedge it’s building out, but without volume and/or a big catalyst, I just don’t see why it would, in either direction. Beginning to lean more bullish as these post-ER cutbacks, cancellations, and layoffs are not tanking this to new lows, with it’s previous post merger low acting as solid support; all things considered I think their financials are going to look a whole lot better over the next year or so as a result of it all, so it’s kinda down to short term retail sentiment vs. long term investors til the next report. None of it matters for any kind of major breakout or breakdown without a boost of volume and/or big news, but that’s okay too, the risk/reward for these are pretty good in my opinion.

Labubs · September 1, 2022, 9:25pm

I haven’t updated much here as 1)the most recently proposed strategy has not changed in any way and 2) I was completely away from the markets for a bit; but I was still keeping an eye on this and really not much has changed, it’s still mostly range bound between 12.70- 13.50, there was a peek above and below the levels but not super substantial.

Buying puts on green days and switching to calls then vice versa is still the way, and has been working out on paper. The only thing that’s a shame is the pop to $14 happened on a red day so I’d have been holding puts, but that did offer an excellent average down/same day entry for the puts, they ended the day with the expected profit from the day before. Would have been a nail biting morning though…

The outlier days are interesting, however. It did pop above 14 for a sec and below 12.80 (I’d say 12.70 is more of a support than 12.80 now to be honest), and those days WBD was disconnected from the overall market, the pop to $14.02, while short lived, was on 8/26, which for SPX/SPY/QQQ was a massive red candle with no bottom wick. That’s interesting to me, it did reattach itself once volume died off later in the morning but the price action when volume is there is definitely something to watch for.

The biggest green days since ER so far have mostly been on Fridays, something else I think is of note. People thinking ratings from the big Sunday shows would cause a pop, covering? Not sure, but something to watch for.

Liquidity/fill times on a lot of strikes still suck (but I was also in WeBull paper where fill times in general are not super accurate); though there’s an uptick of OI on a few strikes for sure. Mostly commenting to keep this thread alive, I had set a reminder for today in case I was still not actively trading, cause I am still following this for any eventual breakout of this range on any news of…some kind of real plan for the company, there have been a few outlines but it seems investors are not impressed with a lot of it, plus those show cancellations. I was and still am starting to become overall bullish on this long term, but the company needs some wins first to break out. Or it goes the other way, but my gut says I just don’t feel Warner Bros. Discovery is a ≤$10 stock.

Will be watching to see what happens as this new Game of Thrones show continues (Friday pops in the face of a red market?)…if it stays good and GoT makes a comeback, people will be buying merch etc again, those waiting for the full season reviews will buy a sub (I think this will be a larger amount than usual for a big streaming show considering how the main series ended up), etc etc; it’s not the biggest potential catalyst, but I’m not gonna ignore it either.

Otherwise, same as two weeks ago, buy above $13.30, sell below or at $13. Yes, these will only be like 5-10%ers, around $5-$15 per contract, but still not bad for only an overnighter or maybe one or two days of holding, considering their cost. This range swinging should continue to be a ‘It’ll work til it doesn’t’ type of thing, watch out for that breakout/breakdown. May be soon from a technical standpoint, but news should be king here. The candles have been getting smaller and a bit more volatile, but the range still exists within them. I’m slowly making my way back to the market so if I do see any post worthy news drop, I’ll be around to put it here. Good luck to all who try this or have been playing it!

Tl;dr-
Buying puts on green days above $13.50 and switching to calls below $13 then vice versa is still the way, it will continue to work til it doesn’t, watch out for any big news that could break this range one way or the other. Fridays have been tending to be greener than most, and while this is mostly attached to overall market, if it’s diverging it’s usually going to be a profitable move to try and play, just keep the levels in mind. The candles have been getting smaller and a bit more volatile, but the range still exists within them. Range is- Lowest Low 12.69, Highest High $14.02, effective range is more like $12.80-$13.45

Labubs · September 7, 2022, 6:04am

This tapped a new low today, dropping below $12.50 for a couple of minutes this morning. It did pull back up a bit and closed out at $12.65, but if tomorrow and especially most of the week is red as well, the range will probably have been broken. Right now it’s still a bit too close to tell, especially with that drift back up to close into the lower end of the range, so a continuing breakdown or push back up into range is what I’ll mainly be looking out for here this week.

I get the impression Wall St is still mostly in a wait and see mindset on this company too, and seem to be looking more and more towards what the brass at WBD are going to do with the CNN side of the business when deciding how and what to keep pricing in. That’s a billion dollar in profit per year arm of the company with not too much news to report on currently (though this is probably something to keep in mind as elections come nearer); and from the sounds of things, folks over there want to bring CNN a bit closer to the center in their reporting, which I’m not fully sure is either bullish or bearish. Not sure how much profit is there in the middle…feels like a “makes no one happy” situation.

Reading through an article or two and the general feel of it all is that analysts and retail both have a curiosity to see what (new CEO) David Zaslav’s plans really are, if he actually has anything of substance planned or not. There are also some concerns that the Discovery stuff he’s brought along with him and is trying to keep alive is just dragging on the rest. ("Right now, HBO Max loses money while keeping his existing business, that cable business, Discovery, and the existing WarnerMedia channels Turner, TNT, afloat and generating a lot of cash. It is a hard challenge to accomplish, and most big media companies have struggled trying to keep their old existing businesses alive while creating new ones." -Linked article)

While layoffs and cancellations may have begun to chip away at it, there’s still $3 billion in cost cuts needed/expected out of WBD. Rumors of a ‘likely’ deal with Amazon are also popping up, that WBD will re-negotiate with them to sell subscriptions through Prime. Still just rumors as of now though.

This is back into a wait and see stage for the beginning of this week as it hasn’t truly broken that pattern it’s been pinging around in quite yet, still looking out for big divergences, for red to continue on a green day or vice versa; and either close below $12.50 and continue trickling down or head back up into that holding pattern til bigger news drops (I’m leaning towards the latter, but not enough to be swinging anything short dated). Either way, I don’t think it’ll do too much without major major news one way or the other.

I’ll be cautious with this one until a new trend establishes or it pings back up into the previous one, and really will be watching out for major news on any budget stuff, any sales of their channels/services, or any new streaming deals with other companies.

Volume hasn’t really changed too much, still 20m-30m a day, though OI on the chain has been ticking up. As with everything, news will the big one here, I’ll be especially watching for anything related to plans for what they plan to do with CNN, and whether they strike a deal with Amazon.

Viewership number aren’t really doing too much to my surprise, there’s a pretty distinct lack of reaction to the Game of Thrones spinoff being well received with very high viewership and even a renewal for a second season, that all feels like an afterthought in the market against what the plans for all the various branches of WBD are going to be (which makes sense, investors will want to see long term value anywhere)

The main article/interview I was reading-

Recode Media’s Peter Kafka joins Yahoo Finance Live to discuss Warner Bros. Discovery CEO David Zaslav’s plan to cut $3 billion in costs and what that entails …

Likely more incoming layoffs, and the short term successes being fairly priced in-

PETER KAFKA: A lot more cuts. People will get laid off throughout the fall from what I’m told. I think it’s a lot of bodies that they have to process, and they have to find ways to save money. As it’s been reported, they’re likely to sell-- they’re likely to strike a big deal with Amazon that will bring in some cash that will allow Amazon to sell subscriptions to HBO Max/Discovery. And that will bring in a lot of short term money. But again, Wall Street has mostly priced that in.

And longer term it’s not so sexy, but David Zaslav has to prove that he can run this combined media company in a way that both produces some kind of profit right now. Right now, HBO Max loses money while keeping his existing business, that cable business, Discovery, and the existing WarnerMedia channels Turner, TNT, afloat and generating a lot of cash. It is a hard challenge to accomplish, and most big media companies have struggled trying to keep their old existing businesses alive while creating new ones.

On cuts already made, and CNN

So when you look at the cuts he’s already made, and you look at what are considered the jewels of the crown for Warner then, where do you think the rest of the cuts are going to start coming from and going forward?

PETER KAFKA: Well, if you look, they were very careful. Even though they had cuts at HBO Max, they have made a point of saying we’re keeping most of HBO and HBO Max intact. There’s going to be a lot of stuff that won’t make headlines. It’ll be less sexy. They’ll combine a lot of operations.

But there is some head scratching where he is going to get some of the savings. You can get some initial one time savings by killing off things like CNN Plus or a “Batgirl” movie, and those will generate headlines as well. But the rest of it is going to be sort of hard to come by, and that’s why folks think that eventually, even though he says he doesn’t want to, he may have to sell some assets, whether that’s something like gaming, which Warner had previously considered selling, or CNN, which the company insists over and over. It does not want to sell. I know people are still knocking on the door interested in buying that property in particular.

That last paragraph brings up an interesting point I’m going to look further into tomorrow, Warner has a gaming division, and a good deal of well known properties under that wing. All the comic stuff, Mortal Kombat, Injustice… nothing earth-shatteringly big (and only one so-so looking game coming out in the very short term), but I’ll dig a bit further into their publishers for all that stuff and see if any rumors are popping up there. I know there’s a new Arkham (Batman series) game coming out this fall, though I’m not sure it’ll do as well as the previous three, I think a lot of people are waiting to see how good it is (or isn’t), as it’s changed quite a bit from the old Arkham formula. It’s not being pre-ordered in droves or anything, I do know that. But then again, if three straight weeks of House of the Dragon pulling record numbers was only enough to keep a range bound, I’m not gonna hold my breath very hard on a game. Won’t ignore it either, though. As always, good luck to all this week!

tedro · September 12, 2022, 2:30pm

I really don’t like their balance sheet. Tons of debt, cost of revenue has grown nearly 3x while revenue is under a 2x in the last few years. Pre-tax income is hugely negative, net tangibles are slowly becoming less negative, but still terrible. How are they maintaining a positive cashflow?.

Honestly, they need to get debt under control. I’d be a watcher once it dips below its 52w low of $12.23 and not a moment sooner. I’d like to catch this stock after a potential bounce off $10.

You won’t be seeing crazy returns going forward. Cable TV is dying. Comcast is about to sell their Hulu stake to Disney and any forward-thinking numbers coming from management are simply predictions to draw in investors. This is a very competitive, capital-intensive market and in the position WDB currently is in, they are likely going to need to dilute equity to payoff loans.

Splitting from AT&T was huge. WDB lost a lot of diversifications. If WDB have a few expensive failed movies/shows in a row, they could take a huge loss at the same time they lose subscribers.

WBD Debt Schedule

WBD Finviz

Q2 Presentation

Labubs · September 12, 2022, 10:07pm

Thank you for the thoughts Tedro! I definitely agree with your points, this company has a lot of proving to do without very much to stand on currently. As more and more time passes with no real plans and no real explanations for cancelling projects, initiating layoffs, and generally just shuffling things around in the name of debt reduction; I’d imagine any positive news would have to be pretty damn big for a bullish break…because of all this and the track record so far, I also am tending to agree it’s more likely to test $10 with a bounce back towards $12-ish, at least on the first test of new lows.

Still waiting on that true range break, thought we might’ve finally be getting it last week but the next day brought us right back up in the middle of it so I went back to watching. I honestly don’t know exactly what is keeping it pinned in this range, just a lack of any substantial news after the market had priced in most of the previous headlines? As Tedro mentioned, their balance sheet kind of sucks, and the CEO remaining fairly tight lipped has been both intriguing and strange (especially considering the moves he has made). It almost feels like people and the market are waiting to see if he has some 4D chess move up his sleeve or if this really is the house of cards it seems to be (probably the latter).

I was definitely interested in seeing what happened last week when it tapped $12.23 and closed at $12.54, I had hoped this range was breaking down but figured I’d give it a day or two to confirm, with the push back up above $12.50 into close and a daily Doji, I was more and more surprised (and a little disappointed) to see it end up back in the range so quickly. Definitely feels like it’s waiting for major news one way or the other and is otherwise stuck here, though for how long that can last I do not know. Eventually something’s gotta give…right?

For the TA/astrology side of things, on the daily that dip below $12.50 and pull back up into range has now created an inverted head with left shoulder, after a few more days of consolidation/ranging a right shoulder will be formed, but TA alone shouldn’t be enough for this, even if most of the volume and PA seems to be algo driven at the moment. Only mentioning this potential set up because some big, good news later this week or the next after a few more days of range, may set up the algos to buy on a pattern recognition alone? There’s really no fundamental reasons to be buying, but the pattern is somewhat there/forming, and with the relatively low volume I’d be remiss not to mention it. However, if any news does come through soon I’d expect it to still be neutral-negative rather than very positive, I imagine we’ll probably see them leaning in to the cancellations and layoffs helping ease some of that debt. Speaking of possible incoming news…

Finally, one more reason I wanted to post today, tomorrow (9/12) at 12:15pm EST (so right in the middle of trading hours), WBD’s CFO will be speaking at Goldman Sach’s “Communicopia and Technology Conference”. How high or low impact this talk will end up being remains to be seen, but definitely something to keep an eye on, as what he does (or doesn’t) say could break this range. It could also end up a nothing-burger, but after about a month of ranging through seemingly priced in merger news, I think the market is ready for any new developments to bring this ticker to an appropriate price point:

https://finance.yahoo.com/news/warner-bros-discovery-chief-financial-203000120.html

Warner Bros. Discovery (Nasdaq: WBD) today announced that its Chief Financial Officer Gunnar Wiedenfels will present at the Goldman Sachs Communacopia + Technology Conference

We’ll see what tomorrow brings and reevaluate from there; and as always, good luck to y’all out there!

Labubs · September 13, 2022, 2:35pm

This is going against the bearish market trend so far today, I would guess it’s because those layoffs are now starting and WBD fully sold off some German streaming platform called Joyn, both of which should be (perceived as) easing a bit of that debt. Still watching out for the talk in two hours and whether or not this is some kind of dead cat bounce, but if this does continue to trickle upwards, I expect heavy resistance at 13.50 (looking again after writing this out, seems to have been rejected hard at $13.17, let’s see if this $12.90 level acts as support or not). Not exactly rushing to get into any positions here though.

Warner Bros. Discovery to proceed with ad layoffs - Report
Warner Bros. Discovery to proceed with ad layoffs - report (NASDAQ:WBD) | Seeking Alpha

Prosiebensat Sees Higher Net Income in 2024 After Joyn Acquisition
https://www.reuters.com/business/media-telecom/prosiebensat-sees-higher-net-income-2024-after-joyn-acquisition-2022-09-13/

Labubs · September 13, 2022, 5:16pm

Not much on the news front yet out of the conference, there’s a small blurb on WeBull news about the CFO saying he ‘Reiterates Guidance That Streaming Business Will Break Even in 2024’. Oddly enough, the only…ahem, source that has direct quotes so far is a comic book website. They focus more on the DC cinematic stuff, but there’s enough in there to warrant posting a link. There was a very small pop on the news but it’s right back to ranging around $12.85. Here we go-

The WeBull blurb

Warner Bros. Discovery CFO Gunnar Wiedenfels Says The Demise Of ‘Batgirl’ Was "Blown Out Of Proportion” By The Media - Bounding Into Comics (Yeah yeah I know)

Says the shelving of the Batgirl film was blown out of proportion, and that WBD haven’t taken as big a hit from it as it’s been made out to be:

…but acknowledges there has been scrutiny swirling around the new heads of the recently-merged conglomerate since the deal was closed.
Still, the exec is bullish about their reputation in the entertainment industry going forward, adding WBD haven’t endured the hit everyone thinks they did by canceling Batgirl and HBO Max original content. It’s all just media chatter in his view.
“Media likes to talk about [the] media, I guess,” Wiedenfels said. “We have healthy relationships with talent, and we are offering one of the best platforms for anyone in the creative space.”

On the future of DC in general:

When the moderator asked if there was some kind of reset strategy for DC, he replied there wasn’t. “No,” he said. “There’s a new team coming in, forming a view, providing a financial framework to assess these things.”
He adds, “The focus is, on a go-forward basis here, we’re spending more than ever in the history of the two legacy companies on content. We will continue to make significant investments.”
And he continued, “We’ll make them differently, with a different financial rigor and a different focus on full utilization across all platforms, et cetera, but this is the lifeblood of the company and we’ll continue to be investing in it.”

Oh hey, something with an actual number or two:

Wiedenfels also assured the company is moving closer toward its $3 billion money-saving goal and that it has “passed the $1 billion mark in synergies.” This has been an uphill battle as the joining of Warner and Discovery operations is actually a matter of “five entities blending: Warner Bros, HBO, Turner, CNN, and Discovery.”
People are working as hard and as fast as possible,” he says, to bring everything into a concordance and to meet the estimated mid-2023 timetable of merging Discovery+ and HBO Max.

So, we knew $3 billion in debt reduction was a shadow over this merger, and the CFO is saying today they’ve hit $1 billion in “synergies”. Will keep an eye out for a more appropriate financial source that will get into exactly what those “synergies” may be, but posting these quotes/source as they’re the first ones to actually have an article on the conference.

Will be looking for a full transcript to see if there’s anything more of substance, but whatever else was said it was not enough to either pump nor dump the ticker…now, to think on what that could mean on a very red market day; I’m not feeling very bullish, but not exactly very bearish either.

On one hand, this is the kind of thing investors will want to be hearing, that there’s a dent being made in that $3 billion, that steps are being taken to continue forward and build up their services, but I still don’t see enough of substance yet to instill high confidence. Still very much feels like seed planting, and investors will want to see follow through. Better than CEO’s silence, though. I would guess we’re in for some more ranging around, possibly for a good bit of time while waiting for some more substantial news. I do still hope for a test of the $10 level, but so far what’s been reported sounds like steps in the right direction for WBD.

Labubs · September 13, 2022, 6:54pm

Somewhat interesting movement going into power hour, $13 has seemingly been recaptured and looks to be holding so far. Too early to say with any real certainty, but a bullish trend is now there intraday. After slowly and steadily climbing up since quotes and news from the conference began trickling out, at 1:48pm it bounced up fairly hard; from $12.99-$13.10, then almost immediately went back and retested $13, and is now making it’s way up to try $13.10 again (addition after finishing writing this at 2:45pm, failed $13.10, back at $13…that hot new $0.10 range dropped, very exciting, I know ) …morning/daily high today was $13.17.

Will be curious to see what PPI brings for the overall market tomorrow and how things move on this ticker in comparison, as market divergences are now becoming more common on this one. Still not rushing into any positions; we’ll see how price action continues through the week while keeping an eye out for any actual sentiment brewing, and also whether or not that (roughly) $12.25-$13.15 range truly gets broken before beginning to look at positioning.

As of now, going through these headlines, I really don’t see anything of substance, pretty much more of the same old promises and plans, just coming from a different exec. It does sound like they are taking steps in the right direction, but I’d want to see some numbers and details on these things before up and flipping bullish. Going to just post a screenshot of WeBull’s news section for now, as most of these are simply the headline/blurb without an article and speak for themselves. I’m assuming more detailed reports on the conference will begin to emerge this evening, if and when I see something new I’ll post it here, most likely editing into this post to keep clutter to a minimum.

Quick news roundup from WeBull (will probably be edited with some links and quotes later this afternoon/as they become available)-

Won’t lie, not the happiest with the buyers’ timing here, with the strikes being $2.5 apart on this chain we would have benefited a lot more from another week or so of trickling down out of range, I’d have loved to get some further out 10c and 12.5c with this sitting between $10-$11, but c’est la vie, it’ll be fine, nothing is ever perfect…Will keep an eye out for news, gonna go try poking it with a stick in the meantime

Labubs · September 15, 2022, 6:50pm

Somewhat strangely green day for WBD today considering how most of the overall market opened and that I’m not seeing much news aside from the CFO’s interviews yesterday. Seems the market likes the layoff plans, or probably more accurately the market is liking to see anything being planned and beginning to be put into motion in terms of reducing that debt. I still don’t think the company has proved much of anything yet, but it does seem like this (very) little bit of news was enough to push back up past $13 and right back to the range. Rest of the week and next will tell if it’ll still be bound or not, looking at Volume, I’m leaning towards probably yes, will be still in range.

Volume is lower today than the recent average 14m vs the typical 15-20m, so not by much, but somewhat significant considering an almost 5% shot upwards on a red day in the market; perhaps the news coming out of the interview re: ad-layoffs and raising subscription costs combined with that small inverse H&S that was forming on the daily actually was enough for the algo pop I was considering a few days back? Not totally sure, I need to look a bit further into how things like that actually work out, I’m definitely not trying to be Mr. aLgOs maaannn, lol.

In any case, this movement was strange in my eyes and warranted mentioning, still looking for range breaks with multi day confirmations before expecting anything beyond pinging between ~12.50 and 13.50 ($12.23 and $14.02 are absolute top and bottom of the current range, though the touch of $14 was very brief and in a wick. $13.55 is a much more commonly tested high on the chart). I do still think this ticker can be a good one to swing through the range high and lows, but I also do want to see a direction picked at this point.

Social media wise, (CEO) David Zaslav is getting more love/slack than I’d have expected, though a fairly large portion of that is good ol’ political co-op’ing of apparent ‘anti-woke’ agendas. Opposite feelings on the other side obviously, but not as loud or noticeable as the ones who think he’s taking the company in the right direction (pun not intended lol). I don’t particularly enjoy the whole media politicking thing, but I find it interesting that this guy is beginning to be put on a pedestal for ‘having the balls to make the hard choices’…choices? He’s made some promises, but WBD still has a lot to prove in my opinion.

Interested to see if this bullish trend continues through tomorrow and next week or if it gets slapped back down to range. There’s no denying at this point this will do it’s own thing when it wants/off of small news…generally price action is similar to rest of market, except for the days it isn’t, on those days it’s really off doing it’s own thing. Have now seen red here on green market days and vice versa more than once, so I’m leaning towards looking out for what the actual catalysts on these divergences really are and if they can be caught earlier. Like, who’d have guessed WBD could have been a double win hedge position today if calls were taken against puts elsewhere?

This is why I want to find the triggers for the divergent days. Will update as I find more out, if anyone else has any ideas on this front (divergences etc) please don’t hesitate to toss out your thoughts!

Labubs · September 19, 2022, 5:06am

Was hoping for a better source to mention this over the weekend, but some rumblings of a 2024 merger/acquisition involving Comcast’s NBCU service and the WBD suite of streaming channels. These pieces are both pretty opinionated, and sources are unnamed (sketchy at best), though there are some interesting considerations for the company and stock price within the chaff.

(I’d call this bearish leaning…)

At this point, it’s hard to think of any strong candidate to run a DC silo. And there are several reasons to wonder why anyone with a decent career would want the job. By now, Zaslav has made enough moves to reveal that — despite that extensive goodwill tour — he is exactly the tough boss that former Discovery insiders described when the Warner Media-Discovery combination first made the news. And with CFO Gunnar Wiedenfels working to slash the staggering $50 billion-plus in debt, the company has content creators wondering publicly what happened to material that disappeared from the streamer without a word of warning, while insiders send out résumés as layoffs roll.

“Zaslav doesn’t know what he doesn’t know,” says one leading talent rep. “That’s scary. And you’re always going to be compared to Marvel. It’s unfair. By the time they were being judged, it was working. It’s the exact opposite at Warner. It’s rough all around. Who the fuck would want that job?”

All these issues pale next to the biggest question hovering over any top job at WBD: How long will this gig last? The company is grappling with that heavy debt load and skeptical investors. One former Zaslav exec recently received a letter from a due-diligence firm on behalf of an unspecified client, asking for his evaluation of Zaslav’s leadership style, strategic plans and likelihood of success. That could suggest various possibilities — a potential acquirer digging around, a dissident shareholder sniffing for weakness, a hedge fund trying to place a bet. So much uncertainty.

[Citation needed, much?]

That (Comcast/NBC) deal would face some interesting antitrust issues but would give his company scale and a viable streaming service. “Obviously Peacock sucks,” says one exec with knowledge of both companies. “There are some good synergies. I’m sure [Roberts] is licking his chops because the [WBD] stock is so low. And I think that’s Zaslav’s endgame. Get the place sold.” (Roberts and NBCU CEO Jeff Shell met with Zaslav and board member John Malone during the Allen & Co. gathering in Sun Valley last July, but given the rules against plotting any combination, that was no doubt just a friendly get-together.) A WBD spokesperson responds: “We are building Warner Bros. Discovery for the long term.”
Many top industry execs are so convinced a deal will happen that some are pre-mourning an event that may never happen.

Again, absolutely no citations or named quotes, so this reads more like a hit piece than anything, but I still found some of the points they brought up interesting to think on. There’s another, similar quality cough garbage cough article on SeekingAlpha, reading like a direct response to the above but with a bullish spin. However, where the last article reads like a hit piece, this reads like a pre-merger, incel-y bag holder (say ‘Mr. Market’ or ‘me too-ism’ one more time, I dare you, double dog dare you mothafu-)… But hey, if there’s an extremely opinionated piece put out, might as well look at the total extremes of the sentiment spread, right?

https://seekingalpha.com/article/4541337-warner-bros-discovery-gold-mine-disguised-as-a-junk-yard-abandoned-by-at-and-t

Despite its mountain of debt, WBD stock is cheap in our view because we see into the decisions of its new management. They seem to signal a clear understanding that the old world of entertainment business is indeed dead. They are attempting to rearrange their business model to match the reality of where real-world consumers’ likes and budgets reside. This is not a popular take on Wall Street yet. Investors still don’t seem to believe WBD can find new, profitable ground and reduce its massive debt in a steady way. Nor does the promise of great content to come do anything but echo as hollow for most participants in the sector. However, we believe WBD got the message. We see earnings moving strongly north no later than 2Q23.

(Comments certainly reflect the opinions of the author, huh?)

Analyst reports on the WBD shares, owner of some 30-odd broadcast, cable, and streaming channels, has likewise stirred lots of investor unrest. It is now a holy mess, brought on by the acquisition of fumbling AT&T Inc. (T) at a staggering valuation of $85b. That mess was handled to new CEO David Zaslav. Valuation has since been shrunken by Wall Street to $33b.

Show me the new blockbuster content before anything. Without it, we’re talking impending doom as to any chances for the stock to move up if WBD is managed with the same diffused focus as its previous owners. Zaslav is sending a new message to producers: Show me the money.

But first, clearly, what WBD has to do at a deliberate pace is find $3b to $4b in cost savings slashing away at the company’s massive debt load. That’s a direction Mr. Market is bound to approve of going forward.

(You don’t say)

It appears clear to me that this is the direction Zaslav seems to be moving on. He recognizes we are indeed in a new day of excess content that cannot forever support massive menus containing few biggies. With WBD channels active in 200 countries in 50 languages, it’s a fair bet that there’s a ton of fat to cut away both in content costs and staffing.

(Fair bet there’s a ton of fat to cut away through your articles, guy)

And so on. There is a table with some financials, but considering they’ve listed the 52 week low at 12.87 I won’t post the whole thing outside of the article, a bit of the ol finger on the scale going on here I think. Their PTs are ~$24-$28 by Q2 of 2023, but taking that with the entire shaker full of salt.
WBD still has to prove these moves are taking the company forward. Barring something totally unexpected and unknown coming completely out of left field, I don’t see many major catalysts on the horizon aside from perhaps Black Adam underperforming at the box office, and I do think more weight will be given to an underperformance as opposed to exceeded expectations on the first few theatrical releases coming up. I mean, $55 billion in debt with a $3bil operating budget, and that’s from the bullish spun article. Layoffs won’t even put a dent in $55 billion, the road ahead for this company is long and hard ().

Still, I thought these two articles were an interesting peek into parts of the reasons why this so stuck in it’s range, there’s a decent sized camp who thinks Zaslav is some second coming and will completely bring WBD all the way back to it’s former valuations and beyond, with most others not quite ready to write them off yet but recognize there are a lot of hurdles to get over (this is the outlook I’m having towards it all).

I did open a pair of Nov 15c with one 10p against them EoD Friday to slowly begin actually playing this range. I don’t expect large returns, trading this kind of thing on paper has really only netted a few bucks per contract, but more importantly it has been consistent, so might as well start having that $10 or $15 per swing being added to my actual balance. Personally I’m expecting a bounce back above/towards $13.25 to sell the calls, though I picked up the put juuust in case it decides to dip below $12.50 again for a couple hours or a day. Yes, we’re playing effectively $0.50 ranges here right now lol.
If it goes green tomorrow (above $13-$13.25) or the next day I will happily sell the calls, wait to see if it continues to a $13.50 or $14 rejection (if not rejected at 13.25) and then either cut or add to the put, depending on news (or hopefully, lack of it) pointing towards any range breaks.

I went with these (cheaper) strikes because there is some small risk of a day of downside first, after this batch I will mostly be going for 12.5c/p at the appropriate ends of the range and also begin pushing out to December, theta’s gonna begin working on Novembers in only a couple weeks already. Which reminds me, there may be a better play here selling spreads for those with the BP/margin to do so, though I haven’t been practicing this myself, so check out the R/R on that if interested; I could picture selling the November 10s or 15s at the right time working out, but again, I’ve only been doing single directions on paper.

Good luck to everyone this week!

Labubs · September 19, 2022, 5:13pm

The bullish spread worked out as planned, sold the first call this morning when WBD was at 13.05 and then the second somewhere between $13.10-$13.15. Was waiting to see if it would push further before this post, but as of noon it didn’t quite make it’s way up into ‘average/add to puts’ territory for me (then again, that too would have worked with a somewhat risky buy-in right above 13.30, but that’s also kinda just hindsighting). I instead just cut the put in between selling the calls for a -$4 loss against the $21 profit on the calls, I probably could have averaged it and held til the next test of the lower end, but when swinging the put side in particular we’ll begin needing December strikes here soon I think. Not to mention this put was just a cheap hedge juuust in case we did tap 12.25-12.50 today before bouncing back above $13 again, will position myself back in when appropriate.

Thinking ~13.50-13.75 would be my put scale-in trigger, up to $14. At/above $14 would require re-evaluation of the range and set up. Remember this is a very low risk, very low reward swing idea, generally $5-$10 profit per contract, usually closer to $6 or $7 each. Good for 1-2%ers. Will wait for that push above $13.50 or else a drop below $12.75-$12.50ish to begin looking at the charts to decide on scaling back in to swing again.

Speaking of the charts, I should mention that when deciding on entries I’m mainly using the 1hr and daily timeframes alongside generally lower IV in the afternoon (ToS’s Imp. Vol study is fantastic for quick glances at overall IV on a ticker); the range’s support/resistance is very visible on the hourly. Regardless of expiration, all of these swings are planned to be very short term, I don’t have any desire to hold contracts on this for more than a day or two at a time, certainly not weekly swings or anything like that yet. Ideally these are overnight at the longest, with the further out expirations basically only taken to be given some theta cushioning in case it dips the other way for a couple days. I’m probably being overly cautious on this front to be honest, but I also wouldn’t really go for FDs here, with such a small range there’s not too much more reward for a lot more (relative) risk, but at the end of the day that’s up to you. No better time to mention that while there are Weeklies and further OTM strikes here, they usually have abysmal-to-zero OI, I would stick with the Monthly 10s, 12.5s, and 15s for these swings, wouldn’t want to get caught holding an illiquid strike while it trickles back up/down…

I also still do believe there’s a potentially better play here selling the 10s and 15s, at the right time/underlying price you should be able to get a decent credit on the Octobers.

Next ER is 11/4 (correction- it may be Nov. 4, but I’ve also seen dates listed for the entire first week of November. NASDAQ’s site says 11/2, so let’s amend this to that date for now), so definitely be more cautious with the Novembers. I think the likelihood of October going ITM on you are very low until more substantial catalysts pop out, and luckily for us those seem to be in short supply here for now. I don’t imagine there will be very much range breaking news over the next month or so, just the ER first week of November* (this will be by far the biggest catalyst in the immediate future) and upcoming film releases come to mind…and those releases may not amount to much (House of the Dragon’s success not doing much to the ticker comes to mind while thinking about this). I’ll leave it to theta gang to decide whether this ticker would be an eligible candidate to sell contracts on, if I’m missing something here with selling the next OTM strikes please let me know so I can adjust this idea in the future.

I wouldn’t be surprised in the slightest if we stay pinging around here til the next earnings report during the first week of November, I believe at this point the only thing that will really move this anywhere substantial is cold hard numbers on updated financials, it seems sentiment is simply too small and/or split between positive and negative to do much here. Anyway, those are some thoughts today, I hope a few others got some lunch money outta here as well!

Labubs · September 21, 2022, 7:54pm

Picked up one 11/18 12.5c, but just the one. This is following the market today, but if the pattern holds we should see a bit of a bounce back up. Possible to see one more day or two of indecision, and news of an exec not renewing his contract hit today as well, though it’s kind of being presented as the guy being noble and easing the layoff pressure in his department.

Can’t quite find a put to hedge with R/R I like, cause if we do fall a bit more, I don’t expect it to go too much further, like $0.10-$0.20 on the underlying. Close under $12.25 on the hourly would be a possible range break, and dips under $12 would be the serious re-evaluation point for me. On the call side November’s R/R is still good if the pattern sticks, theta’s not too nuts yet, I think the likelihood of seeing $13 again within 2 weeks is quite high.

Market has tended to dump after FOMC so keep that in mind, but this has also shown ‘preference’ to staying range bound vs. following the market, so I feel safe enough scaling into a call here under $12.50.

News-