Max Reveal Needs More Surprises: Wall Street still unimpressed by WBD

April 14, 2023

WBD shares have fallen since “Max” Day, which promised better technology — and not much else.

While apparently no one likes the new HBO Max name “Max” (well, almost no one), Wall Street reacted to Wednesday’s rebrand with a bigger “meh” than most.

On April 12th, also known as Max Day, shares of Warner Bros. Discovery ( WBD ) opened at $15.08. By Thursday’s close, WBD closed at $14.04, even despite an afternoon rally. That’s not a big drop on a dollar-for-dollar basis, but WBD shares are down nearly 7 percent. In the same time frame, the S&P 500 rose a hair.

As the 2009 Warner Bros. rom-com Max would say, “(They’re) just not that into you.”

Even with the decline, some media analysts would say WBD stock is still overpriced. On April 13, New York-based Rosenblatt Securities sent a note to investors, obtained by IndieWire, that reiterated WBD as a “sell” stock with a long-term price target of just $11 per share.

These analysts weren’t too impressed by Max’s big reveal, a presentation that contained “a few surprises,” they wrote. This includes the name – we all saw it coming – and some already leaked programming decisions. The boutique research and investment banking firm summed up its concerns: “We continue to see a difficult path for streaming growth to fully offset pay-TV pressure.”

Rosenblatt doesn’t seem to think management will meet its target of 130 million DTC subscribers by 2025, but Warner Bros. Discovery president and CEO David Zaslav reiterated that guidance at Max Day on CNBC. Rosenblatt also pegged Warner Bros.’ Shazam 2 as a $150 million loss, but an insider told IndieWire that the film’s budget and marketing costs were overstated, and the loss is closer to $90-95 million.

In a statement on Thursday, financial services giant UBS maintained its previous $15 target on WBD and a “neutral” or “hold” rating. As a result of the Max rebrand, UBS expects to see a spike in short-term direct consumer losses for Max marketing alone.

About four weeks ago, stock analysts at Wells Fargo upgraded WBD stock to a “Buy” rating, raising their price target from $13 to $20 per share, based on the company’s cost-saving opportunities and cash. At the same time, Macquarie Financial Group’s target was $22.

In summary, WBD: buy, sell, obsession It lasts. No wonder stocks aren’t soaring after Wednesday’s big dog-and-pony show.

He’s saying goodbye to HBO Max soon

HBO Max

The name of the new platform itself does not inspire much confidence. ‘Max’ may not generate the rapid-fire lines of ‘Peacock’ or ‘Freevee’, but its online detractors stand. Bryan Sullivan, legal strategist at Early Sullivan, likes it.

“From a branding perspective, it’s easier to say ‘Max.’ One syllable, one word,” said the litigator, who has practiced extensively in the fields of entertainment and intellectual property. “Now this might be a joke because you’re used to ‘HBO Max.’

“Simple” and “straightforward” are good (Sullivan says “easy to say, not complicated, not weird”). He believes that in two years, “Max” will become second nature to everyone. (Disclosure: Sullivan is a WBD shareholder, buys and holds.)

What really matters is the excitement that future productions bring. “No one will really care about (the name),” he said. “They’re just going to focus on the promoted content and then talk about how great Max is.”

But before we get a new Harry Potter, we have the joke. As:

Hopefully Peacock doesn’t get the idea. https://t.co/K3ao0Q3Mj5

– Matt Goldich (@MattGoldich) April 12, 2023

Dying laughing that the new branding is from “HBO Max” to “Max is where you can find HBO stuff.” pic.twitter.com/Fp4X7t2c4N

— Jeff Zhang 张佶润 (@strangeharbors) April 12, 2023