Bullish Alert: Watch Disney and Warner Bros. Discovery
After Warner Bros Discovery (WBD) rallied, Disney (DIS) is on watch for a more bullish upside. Disney said on Monday that it completed its Hulu purchase.
Disney paid another $438.7 million to buy NBCUniversal’s stake in the streaming services firm. As a result, Disney may strengthen the Disney+ streaming service. DIS stock bottomed in the low $80s. Opening at $115.66, the stock has the momentum to break above its 52-week high.
Warner Bros stock is also heading toward a breakout. Shares opened above $11.00 on Monday but closed down at $9.53. The company announced that it would split into two firms. The streaming and services unit will hold television, motion pictures, DC Studios, HBO, and HBO Max. It will also own the film and television content.
Global Networks will hold CNN, TNT Sports, Discovery, and the free channels broadcast in Europe and its digital products.
Risk
When AT&T (T) split out WBD stock, the run-up proved short-lived. WBD stock languished over the last few years. This split may result in the same run-up followed by underperformance. Shareholders still require the underlying streaming business to grow subscribers and operate on higher operating margins.
Related Investments
Readers may consider Sony (SONY), whose stock performed better than WBD stock in the long term. Comcast (CMCSA) is still in a downtrend while Paramount Global (PARA) is up as investors wait for the buyout to close.
