WBD Gears Up to Report Q2 Earnings: What's Ahead for the Stock?

Warner Bros. Discovery (WBD) faces a mixed outlook ahead of its Q2 2025 earnings report, with consensus estimates projecting $9.83 billion in revenue, a modest 1.2% year-over-year increase, but a loss of 14 cents per share, representing a significant increase in loss magnitude from the prior year. While the streaming segment is expected to maintain strong momentum driven by content and international expansion, and the studios segment is anticipated to rebound, continued weakness in linear networks and a projected 2% decline in advertising revenue due to sports programming shifts remain headwinds. Furthermore, Zacks' model assigns a low probability of an earnings beat, citing WBD's -47.89% Earnings ESP and a history of considerable earnings misses.

Analysis

Warner Bros. Discovery (WBD) presents a challenging outlook ahead of its second-quarter 2025 earnings release, characterized by diverging segment performance and deteriorating profitability. Consensus estimates project a modest 1.20% year-over-year revenue increase to $9.83 billion, but a significant 96.56% increase in loss per share to $0.14. This is compounded by a poor track record, with the company missing earnings estimates in three of the last four quarters, resulting in an average negative surprise of 659.92%. The primary growth drivers are expected to be the Streaming and Studios segments. The streaming division is anticipated to build on its Q1 momentum, which saw 5.3 million new subscribers and an 8% revenue increase, supported by popular content and international expansion. Concurrently, the Studios segment is poised for a rebound following a soft first quarter, bolstered by new film releases and a major internal licensing agreement. However, these bright spots are overshadowed by persistent headwinds. The Linear Networks segment continues to face secular declines in viewership and a difficult advertising market. Furthermore, overall advertising revenue is projected to fall 2% year-over-year due to the absence of the NCAA Final Four tournament, creating an unfavorable comparison. The quantitative outlook is also negative, as the Zacks model indicates a low probability of an earnings beat, citing a Zacks Rank #3 (Hold) and a deeply negative Earnings ESP of -47.89%.

Key Decisions for Investors

• Investors should scrutinize the performance divergence between the growing Streaming and Studios segments against the declining Linear Networks, as the ability of the former to offset the latter's weakness is critical to the investment thesis.
• Given the company's history of substantial earnings misses and a highly negative Earnings ESP of -47.89%, it would be prudent to prepare for potential downside volatility following the earnings announcement.
• Focus on management commentary regarding the path to profitability, as the projected 96.56% increase in year-over-year loss suggests that current top-line growth is insufficient to improve bottom-line results.
• Monitor the reported advertising revenue figures closely, as the projected 2% decline indicates ongoing pressure in a key revenue stream that could weigh on future performance.