AT&T (NYSE:T) stock slumped more than 20% in morning trading before reversing higher. This volatility comes ahead of today’s official debut of Warner Bros. Discovery (NASDAQ:WBD).
On April 6, I reported that “AT&T is spinning off Warner Media, which will combine with Discovery (NASDAQ:DISCA) to form Warner Bros. Discovery.” Investors who owned T stock as of the market’s close on April 6 had the right to receive 0.24 shares of WBD stock for each share of AT&T that they had at the time.
Such shareholders, however, have been able to sell their shares of Warner Bros. Discovery’s stock since last week.
The merger between Discovery and Warner Media was completed on April 8.
In addition to the Discovery Channel and Warner Bros’ movies, TV shows and video games, Warner Bros. Discovery will offer content from HBO, TNT, TBS, CNN, the Food Network, the Travel Channel, Animal Planet, the Oprah Winfrey Network and multiple other channels.
Analysts Are Upbeat on Warner Bros. Discovery, T Stock
On March 7, research firm Barrington wrote that Warner Bros. Discovery “will have substantial content production and distribution capabilities that can be utilized for a compelling direct-to-consumer offering targeting a variety of demos,” The Hollywood Reporter noted. And Peter Csathy, the chairman of entertainment and technology consulting firm CreaTV Media, told The Hollywood Reporter that Warner Media was a “contender” in the streaming wars even before the merger.
Bullish on T stock is JPMorgan Chase, which called T stock in the wake of the spinoff a “core communications services business with strong customer relationships in wireless and fiber to drive recurring revenue, EBITDA and FCF growth.” The firm has a $22 price target and an “overweight” rating on the shares.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.