Warner Bros. Discovery, Inc. (WBD)
Quantitative Summary
DeterministicWBD trades at 93.0x earnings — a 190% premium to its sector average of 32.1x — without a dominant ROIC-WACC spread. Strong operational fundamentals (Piotroski 7/9) with Altman Z of 1.0. DCF fair value of $8 implies 71% downside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe fundamental economics of this communication services entity reveal a significant divergence between current market pricing and capital efficiency metrics. Despite maintaining a robust gross margin of 44.0% and demonstrating strong financial statement integrity with a Piotroski F-Score of 7/9 and Beneish M-Score of -2.59, the company's value creation is severely impaired by an ROIC-WACC spread of -8.1%. This negative spread indicates that capital deployment destroys shareholder value relative to the cost of funds, a reality underscored by an Altman Z-Score of 1.0 which flags heightened bankruptcy risk. While leverage at 2.69x provides some structural support for the DuPont ROE decomposition, the extremely thin net margin of 1.9% and declining revenue trajectory of -5.1% suggest that operational headwinds are outweighing any efficiency gains from asset turnover.
Valuation metrics present a stark disconnect between historical norms and intrinsic value estimates derived from cash flow modeling. The current P/E ratio of 94.2x sits dramatically above the sector average of 27.3x, implying that the market is pricing in aggressive future expansion rather than reflecting current earnings power. This optimism appears misaligned with a DCF fair value calculation suggesting $7 per share and an implied downside of -72.8%, indicating that forward-looking models do not support existing equity levels even if they assume a high 10-year free cash flow growth rate of 17.1%. The disparity suggests the market may be overcompensating for potential turnaround scenarios while ignoring the immediate drag on profitability and revenue contraction.
Risk factor analysis further complicates the risk-reward profile, highlighting significant exposure to value deterioration despite anomalous alpha performance. Fama-French factor exposures reveal a pronounced growth tilt with an HML score of -0.156 and weak profitability indicated by an RMW score of -0.162, positioning the stock poorly within traditional multi-factor frameworks. Compounding these fundamental concerns is substantial insider activity, characterized by $251 million in net selling over the last 90 days, which often signals management's skepticism regarding near-term valuation or capital allocation prospects. Collectively, these data points suggest a high-risk environment where downside protection relies heavily on an improbable reversal of revenue trends and margin expansion to justify current equity premiums.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of -5% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 9.3% | 11.3% | 13.3% |
|---|---|---|---|
| 2% | $11 | $6 | $3 |
| 3% | $14 | $8 | $4 |
| 4% | $17 | $10 | $5 |
Center = base case. Green = >10% upside, Red = >10% downside vs $27.18.
Pre-computed DCF: WACC=11.3%, terminal growth 3%. Fair value $8 (-71.5%). Not investment advice.
Valuation Context
Currently trading 39% above its 5-year average P/E of 68.3x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedThe security's current price of $27.75 is below its 50-day simple moving average but above the 200-day SMA, suggesting a short-term downtrend within an overall upward trend over the past six months. With a Relative Strength Index (RSI) of 43.6, which falls in neutral territory between oversold and overbought conditions, the stock appears to be experiencing consolidation rather than signaling imminent strength or weakness.
Quant Health Deep Dive
Profitability & Value Creation
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like XLC or VOX, the fund manager is mechanically forced to buy or sell WBD shares regardless of Warner Bros. Discovery, Inc.'s individual fundamentals. We estimate $11.1B of passive capital is structurally linked to WBD through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in Warner Bros. Discovery, Inc. to visualize passive redemption contagion across ETFs and collateral stocks.
If Warner Bros. Discovery, Inc. (WBD) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies Facebook Inc. Class A (META) as the most exposed collateral stock, sharing 1 ETFs with WBD. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 27 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
WBD Ownership Dynamics
Passive funds hold 1 in every 6 WBD shares, reducing daily market volatility.
Warner Bros. Discovery, Inc. (WBD) exerts notable gravity on the passive index market, currently representing 4.2% of the State Street Communication Services Select Sector SPDR ETF (XLC) and 2.7% of the VOX (VOX). Across 28 tracked ETFs, approximately 424M shares (16.9% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest WBD Exposure
Float lock-up computed from 28 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
WBD Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for Warner Bros. Discovery, Inc. over the past year sits near $27.39 (15% of 252-day volume). The current price of $27.18 sits 0.8% below the POC — suggesting potential mean-reversion upside if institutional demand reasserts at this level. The highly concentrated volume profile (15% at POC) indicates strong consensus on fair value — institutional participants have repeatedly transacted near this price.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
WBD Capital Efficiency
How efficiently does Warner Bros. Discovery, Inc. convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
Warner Bros. Discovery, Inc. converts 15% of its EBITDA into free cash flow, a low conversion rate suggesting heavy reinvestment. This may indicate a growth phase (building capacity) or structural capital intensity. The 85% reinvestment rate signals aggressive capacity expansion. However, the ROIC-WACC spread is negative (-8.0%), suggesting reinvested capital is destroying shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-14 | 1 | $27.25 | $27.25 |
| 2026-05-13 | 81 | $27.20 | $2,203.2 |
| 2026-05-12 | 96 | $27.24 | $2,615.04 |
| 2026-05-11 | 9,099 | $27.11 | $246,673.89 |
| 2026-05-07 | 37 | $27.20 | $1,006.4 |
| 2026-05-04 | 257 | $26.97 | $6,931.29 |
| 2026-05-01 | 3 | $27.05 | $81.15 |
| 2026-04-29 | 72,090 | $26.95 | $1.9M |
| 2026-04-28 | 459 | $26.82 | $12,310.38 |
| 2026-04-15 | 18 | $27.37 | $492.66 |
| 2026-04-14 | 2 | $27.39 | $54.78 |
| 2026-04-07 | 22,409 | $27.41 | $614,230.69 |
| 2026-04-02 | 5,533 | $27.49 | $152,102.17 |
| 2026-03-25 | 247 | $27.28 | $6,738.16 |
| 2026-03-24 | 98 | $27.40 | $2,685.2 |
| 2026-03-23 | 700 | $27.42 | $19,194 |
| 2026-03-20 | 47,678 | $27.63 | $1.3M |
| 2026-03-17 | 664,087 | $27.51 | $18.3M |
| 2026-03-12 | 224 | $27.81 | $6,229.44 |
| 2026-03-10 | 454 | $27.75 | $12,598.5 |
| 2026-03-09 | 16,236 | $27.95 | $453,796.2 |
| 2026-03-04 | 299 | $28.20 | $8,431.8 |
| 2026-03-03 | 21,749 | $28.50 | $619,846.5 |
| 2026-03-02 | 353 | $28.17 | $9,944.01 |
| 2026-02-23 | 14,488 | $28.75 | $416,530 |
| 2026-02-20 | 837 | $28.53 | $23,879.61 |
| 2026-02-12 | 117 | $27.99 | $3,274.83 |
| 2026-02-09 | 96 | $27.36 | $2,626.56 |
| 2026-02-06 | 394 | $26.76 | $10,543.44 |
| 2026-02-05 | 1,153,435 | $27.03 | $31.2M |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| SEE | 0.353 | 0.116 | Moderate |
| VRTPX | 0.343 | 0.182 | Moderate |
| TSLA | 0.329 | 0.160 | Moderate |
| KKR | 0.325 | 0.244 | Moderate |
| SLG | 0.302 | 0.155 | Moderate |
| VNO | 0.298 | 0.146 | Low correlation |
| TRMB | 0.297 | 0.219 | Low correlation |
| SWK | 0.292 | 0.251 | Low correlation |
| LAMR | 0.291 | 0.178 | Low correlation |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare WBD to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.