Friday's Headlines: Warner Bros. Discovery Explores Drastic Measures

Friday's Headlines: Warner Bros. Discovery Explores Drastic Measures

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

MercadoLibre (MELI) +16.2%

Yext (YEXT) +5.6%

StoneCo (STNE) +5.4%

Lemonade (LMND) +5.4%

Match Group (MTCH) +5.2%

Moving Down ⬇️

Peloton Interactive (PTON) -7.8%

Duolingo (DUOL) -5.6%

Nordstrom (JWN) -5.4%

Trupanion (TRUP) -4.3%

Duluth Trading (DLTH) -4.1%

Here are the stories that you need to know ahead of market-open today, Friday the 5th of August.

Warner Bros. Discovery Explores Drastic Measures 🎬

Last night saw entertainment conglomerate Warner Bros. Discovery deliver one of its first earnings reports since its creation following the merger of AT&T’s WarnerMedia and Discovery. Shareholders hoping for a jubilant report were sadly mistaken, as top and bottom line misses have sent its stock plummeting by over 10% in pre-market trading today.

Revenue of $9.8 billion vastly underperformed the consensus estimate of $11.91 billion, while a total loss of $3.4 billion surprised analysts who were expecting positive earnings at the minimum. Merger-related charges and a significant slowdown in all-around advertising spend were the primary reasons blamed for this underperformance.

In an attempt to reverse this worrying slide, the company has announced that it’s planning to explore a free streaming service supported by ads. This would serve as “an entry point to our premium service” according to CEO David Zaslav. While not entirely a novel approach, with chief competitor Netflix exploring an ad-supported tier too, this could provide a welcome boost to the firm.

Chief financial officer Gunnar Wiedenfels outlined that “2022 will clearly be a transition year” for the company, with advertising sales expected to continue to decline globally. Change is needed rapidly for the firm though, as the streaming space continues to become more and more populated by legacy media firms looking to enter the modern era.

Since merging in early April, Warner Bros Discovery has been on a downward trajectory — down over 31% year-to-date. While its latest plans could very well buoy the company through a tough time for steaming networks, it’s clear that more work needs to be done to carve out a dominant space in the market.

Want to hear more about Warner Bros. Discovery? In the latest episode of the Stock Club Podcast, our analyst Anne Marie gives a detailed pitch on the firm.

Atlassian Shares Jump on Earnings Beat and Rosy Outlook 🌹

Shares of Atlassian (TEAM) are up 12% in pre-market trading after the collaboration software maker smashed revenue expectations. The company brought in $760 million for the quarter, far surpassing the $720 million that analysts had estimated. Adjusted earnings per share were in-line at 27 cents.

The company also saw strong growth in its subscription business, with subscriptions revenue growing 55% year-over-year to $597 million.

“We capped off fiscal year 2022 with strong Q4 results, growing Cloud revenue 55 percent year-over-year,” said Mike Cannon-Brookes, Atlassian’s co-founder and co-CEO. “We believe that Atlassian is uniquely positioned, with great momentum and a differentiated business model. While we can’t predict what the future holds at a macro level, we’re forging ahead with conviction and vigilance as we look to deepen our strategic position.”

The company also gave upbeat guidance for the coming quarter, saying it has seen little to suggest that customers are moving away. Management said, “whilst our products punch above their weight in terms of value, Atlassian is a relatively small line item in overall IT budgets and likely not where customers look to reduce costs.”

It now expects to bring in between $795 and $810 million in revenue, with earnings of between 37 and 38 cents per share. Analysts polled had expected $774 million in revenue.

Despite its sustained growth and profitability, Atlassian has not been immune to the recent downturn in technology stocks. Before last night's report, shares of the Australian company were down over 40% for the year.

DoorDash Surges On Revenue Beat in Q2 🚀

Shares of DoorDash are trading 13% higher pre-market today after the company announced its Q2 results after market close on August 4. DoorDash reported revenue of $1.61 billion and an adjusted loss per share of $0.72 in the June quarter.

Comparatively, analysts expected the food delivery giant to report revenue of $1.52 billion and an adjusted loss of $0.41 per share in the second quarter.

DoorDash grew sales by 30% while total orders surged 23% year-over-year to 426 million, an all-time high for the company. However, DoorDash warned investors about a softer consumer spending environment which could impact top-line growth in the second half of 2022.

After the recent uptick in share price, DoorDash is now valued at a market cap of $30 billion. Founded in 2013, DoorDash operates a logistics platform in 27 countries globally and is building infrastructure for local commerce. It has two primary business segments that include its Marketplace and Platform Services.

DoorDash built the Marketplace business to serve the needs of merchants, consumers, and dashers. It also provides merchants services such as order fulfillment, merchandising, and payment processing. The Platform Service business helps merchants facilitate sales through their own channels.

DoorDash sales have risen from $291 million in 2018 to $4.88 billion in 2021. Its revenue has grown in the last 12 months to $5.26 billion.