Warner Bros. Discovery (WBD) stock is up 62.3% in 21 trading days. Already own the stock? Might want to consider booking some profit as there is risk – specific to growth, profitability, balance sheet and downturn resilience. Consider the following data:
- Size: A $48 Bil company with $38 Bil in revenue currently trading at $19.56.
- Fundamentals: Last 12 month revenue growth of -3.7% and operating margin of 2.5%.
- Liquidity: Has Debt to Equity ratio of 0.71 and Cash to Assets ratio of 0.05
- Valuation: Currently trading at P/E multiple of 63.1 and P/EBIT multiple of 14.2
- Has returned (median) 60.8% within a year following sharp dips since 2010. See WBD Dip Buy Analysis.
While we like to ride the momentum if the fundamentals check out – for WBD, see Buy or Sell WBD Stock – we are vary of bull traps. Specifically, it is worth trying to answer if things get really bad, and WBD drops 20-30% to $13.69 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Warner Bros. Discovery (WBD) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: WBD provides global content in about 50 languages across multiple genres and operates television networks including documentary, lifestyle, food, travel, and kids programming.
2022 Inflation Shock
- WBD stock fell 88.5% from a high of $77.27 on 19 March 2021 to $8.87 on 28 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $19.61 on 22 September 2025 , and currently trades at $19.56
| WBD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -88.5% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- WBD stock fell 44.0% from a high of $32.77 on 16 January 2020 to $18.36 on 3 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 January 2021
| WBD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -44.0% | -33.9% |
| Time to Full Recovery | 278 days | 148 days |
2018 Correction
- WBD stock fell 45.0% from a high of $29.62 on 21 February 2017 to $16.28 on 14 November 2017 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 12 September 2018
| WBD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -45.0% | -19.8% |
| Time to Full Recovery | 302 days | 120 days |
2008 Global Financial Crisis
- WBD stock fell 64.9% from a high of $14.74 on 5 October 2007 to $5.18 on 24 October 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 16 September 2009
| WBD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -64.9% | -56.8% |
| Time to Full Recovery | 327 days | 1480 days |
Worried that WBD could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Disclaimer: The story “WBD Climbed 62% In A Month. How Confident Are You In The Stock?” first appeared on Trefis and is syndicated via Digpu & NewsTex.