• Warner Bros. Discovery (WBD) stock is trading at a very reasonable valuation.
• The misstep with CNN+ was cringe-worthy, but there are still reasons to consider an investment in Warner Bros. Discovery.
• Investors should hold their shares or even add to their stock positions at the current price point.

Recently formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ:WBD) was supposed to be the spin-off that would make waves in the digital entertainment market. WBD stock is under negative price pressure, but this should only get value-focused investors excited.

Remember, the formula for value investing is to buy low and (hopefully) sell higher later on. This can be done with confidence if you’re positioning yourself with a giant company like Warner Bros. Discovery.

Granted, Warner Bros. Discovery had a misstep not long ago, and it was well publicized in the media. It’s important to be aware of what took place, but also to avoid over-focusing on that failure.

After all, one failure doesn’t mark the end of Warner Bros. Discovery as a viable business enterprise. Digging into the company’s financial data will reveal an entertainment giant that’s capable of delivering solid results.

What’s Happening With WBD Stock?

Going back to the recent past, WBD stock started trading on the Nasdaq exchange on April 12. Reportedly, Bank of America analyst Jessica Reif declared that Warner Bros. Discovery will “be the most exciting story” in its sector (media/entertainment, presumably) for the next few years.

Meanwhile, Yahoo Finance‘s Allie Canal suggested that there was “a lot of bullish optimism” surrounding Warner Bros. Discovery. Canal added that this optimism “mostly has to do with that pipeline, with the content offering.”

Lately, though, the general sense of optimism on Wall Street has soured. As WBD stock slipped below $20, some folks might wonder whether this is a toxic asset or the bargain of a lifetime.

For true contrarians, the answer could lie within a classic valuation metric. Amazingly, Warner Bros. Discovery’s trailing 12-month price-to-earnings ratio is a bit under 10. That’s a bargain if you ever saw one.

On the other hand, WBD stock is only worth owning if Warner Bros. Discovery is a thriving business. One particular misadventure will provide fodder for the skeptics, but Warner Bros. Discovery’s financial results should quell anyone’s concerns about the company’s viability.

Bad News and Good News

So, let’s start off with the 800-pound elephant in the room. Warner Bros. Discovery royally messed up with CNN+.

According to an article from The New York Times, CNN+ was the “brainchild of CNN’s former corporate parent, WarnerMedia, and its former president Jeff Zucker.” The idea, apparently, was to create a “versatile digital product with big-name hosts that could buttress the network amid a decline in traditional cable viewership.”

Evidently, these plans didn’t work out too well. Shockingly, Warner Bros. Discovery announced that it’s shutting down CNN+, just three weeks after its launch.

Perhaps CNN+ didn’t have enough daily users to justify continuing as a going venture. In any event, CNN+ was cringe-worthy from a business standpoint, but let’s not dismiss Warner Bros. Discovery as a profitable media enterprise.

Notably, during 2022’s first quarter, Warner Bros. Discovery generated $3.159 billion in total revenues, up 13% year-over-year. Furthermore, the company showed a vast increase in earnings per diluted share, from 21 cents in 2021’s first quarter to 69 cents in Q1 2022.

What You Can Do With WBD Stock Now

Shares of Warner Bros. Discovery are currently trading at a very reasonable valuation. The company is huge, with a vast backlog of popular entertainment content.

Thus, you can invest in WBD stock with confidence despite the CNN+ mishap. Every company, even a great one, is bound to make mistakes. Hopefully, Warner Bros. Discovery can put the CNN+ misstep in the rear-view mirror and continue to demonstrate top- and bottom-line financial growth.

On the date of publication, David Moadel 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.