Warner Bros. Discovery (WBD) stock experienced a slight decline of 0.2% in premarket trades on Tuesday. This comes as the company adjusts its 2023 financial guidance in response to the ongoing strikes initiated by the Writers Guild of America and the SAG-AFTRA actors in Hollywood.
Optimistically, Warner Bros. Discovery hopes for a swift resolution to these strikes; however, the company cannot accurately determine when they will eventually come to an end. As a result, the company now anticipates that the financial impact of these strikes will continue until the conclusion of 2023.
The strikes are projected to have a significant effect on Warner Bros. Discovery’s full-year adjusted earnings before interest, taxes, depreciation, and amortization. The estimated impact ranges between $300 million and $500 million, contributing to a revised range of $10.5 billion to $11 billion.
Despite these challenges, the company remains optimistic about its third-quarter performance. Notably, the upcoming release of the highly-anticipated “Barbie” movie, coupled with other favorable factors, is expected to generate a boost in third-quarter free cash flow. Warner Bros. Discovery forecasts a figure of $1.7 billion, surpassing the FactSet consensus analyst estimate of $1.65 billion.
Overall, while the ongoing strikes present a hurdle for Warner Bros. Discovery, the company remains confident in its ability to navigate these challenges and maintain a strong trajectory in the coming quarters.