Warner Bros Discovery Plans Password Crackdown, Cuts Costs

Warner Bros Discovery is set to launch a password-sharing crackdown akin to Netflix's, aiming to boost its subscriber base and profitability while simultaneously reducing costs.

Date: 09-09-2024

AI Rating: 6

Warner Bros Discovery (WBD) is proactively addressing its profitability by launching a password-sharing crackdown similar to Netflix's successful implementation. This initiative is expected to help the company recover lost revenue and potentially increase its subscriber count by moving away from shared accounts.

The company has already begun to assess its operational costs. Recently, WBD sold a piece of real estate at Hudson Yards, which may free up capital for other expenses or debt repayment. This action aligns with the ongoing trend of companies seeking to reduce expenses amid economic pressure.

Furthermore, there are significant cuts happening within its gaming division, particularly at Rocksteady Games, following a failed title. While cutting expenses can help the bottom line short-term, it raises concerns about the quality of future gaming products if remaining staff are overburdened with larger workloads. This could impact WBD's brand perception in the long run.

According to Wall Street, the stock is currently rated a Moderate Buy, reflecting a cautious optimism around the company's strategies. The reported average price target of $12.50 suggests a potential upside of nearly 70% from its current share price, indicating that investors might see considerable value if the company's strategies bear fruit.

However, WBD also experienced a significant share price decline of about 36.81% in the last year, which could weigh on investor sentiment. The market may be hesitant to respond positively until it sees measurable improvements following the new initiatives.

Stocks: NFLX WBD