What Happened?
Shares of global entertainment and media company Warner Bros. Discovery (NASDAQ: WBD) jumped 4.6% in the afternoon session after the company rejected an initial takeover offer from Paramount Skydance and received a price target increase from Citigroup.
The media giant turned down a bid of around $20 per share from Paramount Skydance, a move that suggested the company's leadership believed its intrinsic value was much higher. This rejection of what was termed a “too low” bid fueled investor optimism. Adding to the positive sentiment, Citigroup raised its price target on the stock to $25 from $14, while keeping a 'Buy' rating. The brokerage cited improving business fundamentals and growing profitability in the company's streaming division. Reports also indicated that despite the initial rejection, talks between the two companies were continuing, keeping the possibility of a future, higher-priced deal alive.
After the initial pop the shares cooled down to $17.90, up 4.6% from previous close.
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What Is The Market Telling Us
Warner Bros. Discovery’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 2.5%as a confluence of negative economic data pointed to a weak economy. The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations are rising, while their outlook on the labor market is deteriorating. Consumers expressed greater concern about potential job losses and expect lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position. The ongoing U.S. government shutdown further dampens sentiment, threatening to weigh on incomes and purchasing power.
Warner Bros. Discovery is up 67.9% since the beginning of the year, but at $17.90 per share, it is still trading 9.7% below its 52-week high of $19.82 from September 2025. Investors who bought $1,000 worth of Warner Bros. Discovery’s shares 5 years ago would now be looking at an investment worth $829.62.
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