WBD 3.755 03/15/2027

Warner Bros Discovery Inc

Credit, TMT


Publicly traded companies mentioned herein: AT&T Inc (T), Netflix Inc (NFLX), Paramount Global (PARA), Walt Disney Co/The (DIS), Warner Bros Discovery Inc (WBD)

Highlights

The presenter is short the 3.755% March 2027 bonds of Warner Bros Discovery (WBD), citing the company’s high leverage (5x net levered) and secular decline in the linear media business that makes up >100% of consolidated EBITDA. Compared to consensus models anticipating growth in EBITDA and cash flow over the next few years, the presenter considers consistent growth unlikely and views the stock as a melting ice cube with significant risk to near-term EBITDA and FCF numbers. The bond trades tight, trading at a ~200bp spread and yielding ~5.6%. Given his outlook below consensus, he thinks the security should have a DD% yield, which equates to 20%+ downside. 

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Idea Discussion

Commentor 1 - 2 weeks ago

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