By Warner Bros. Discovery Inc (NASDAQ: WBD) soared more than 30% late on Thursday following reports that Paramount Skydance is preparing a bid to takeover the mass media and entertainment conglomerate.
The news arrives months after WBD announced plans of a strategic reset, which will split its global TV networks from its streaming and studio operations – and weeks after Paramount and Skydance completed their planned merger.
Warner Bros. Discovery shares have been in a sharp uptrend over the past five months. Including today’s surge, WBD stock is up more than 100% versus its year-to-date low in early April.
Why Paramount Skydance takeover may be positive for WBD stock
Investors are cheering mostly because a potential acquisition by Paramount Skydance could unlock significant value for Warner Bros. Discovery shareholders.
The joint entity will merge deep content libraries, global distribution channels, and complementary streaming platforms – creating a formidable rival to the likes of Netflix and Disney.
Paramount’s interest in acquiring WBD “in its entirety” suggests confidence in the long-term value of both the company’s studio and cable assets.
A takeover bid will be positive for WBD shares also because it reportedly includes a majority cash component, which could offer immediate liquidity to investors.
With founder-led leadership at Skydance and renewed strategic focus post-merger, the deal could accelerate consolidation in the media space and position Warner Bros. Discovery for much stronger monetization across platforms.
Is it already too late to invest in Warner Bros. Discovery shares
Even without the acquisition, Warner Bros. Discovery stock is fairly attractive to own in 2025.
The company’s decision to separate its businesses could unlock operational efficiencies and allow investors to value its streaming and legacy TV assets independently.
Financially, WBD maintains strong EBITDA margin of around 50%, and its debt-to-equity ratio remains manageable at 0.96.
Moreover, at a price-to-sales (P/S) ratio of about 0.77 – WBD shares’ valuation remains attractive relative to peers as well, especially given its global content footprint and potential for monetisation through HBO Max and Discovery+.
On the flip side, if Paramount Skydance does indeed proceed with the buyout, it will likely choose to take Warner Bros. Discovery private.
For that, the media giant will have to pay a substantial premium to incentivise shareholders to sell.
That’s standard in buyout scenarios – especially for firms like WBD with valuable IP and global reach.
What’s next for WBD shares?
Whether or not the Paramount Skydance bid materializes, WBD shares are now firmly in spotlight.
The leadership’s decision to split its business signals a willingness to adapt, and the market’s reaction shows investor appetite for bold moves.
Wall Street also currently has a consensus “overweight” rating on Warner Bros. Discovery stock with price targets going as high as $19, indicating potential for another 15% upside from here.
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