Warner Bros. Discovery shares drift after Q1 loss, investors weigh what “next” earnings may show

Warner Bros. Discovery, Inc.’s stock has edged lower since the company reported first-quarter 2026 results roughly a month earlier. A market recap published June 5 said WBD was down about 0.4% since that earnings report, and framed the next question for shareholders as whether the trend can reverse into the next update of quarterly performance and investor expectations.

In the earnings release dated May 6, Warner Bros. Discovery reported total revenue of $8.893 billion for the quarter ended March 31, down from $8.979 billion a year earlier. The company recorded a net loss of $2.906 billion, translating into a net loss per share of $1.17, figures that were heavily shaped by merger-related accounting items rather than day-to-day operating results alone. In the same filing, Warner Bros. Discovery said the net loss included a $2.8 billion termination fee related to Netflix.

That Netflix termination fee was presented as a specific merger agreement payment, and the company clarified that Paramount Skydance (referred to in the release as “PSKY”) paid Netflix the $2.8 billion on WBD’s behalf under the merger agreement. The release also said the payment is refundable to PSKY in certain circumstances, including the termination of the PSKY merger agreement by WBD for a superior proposal or the violation of interim operating covenants. The implication for investors is that net income volatility tied to deal mechanics may remain a feature of reported results even if core operations improve.

Looking past the net-loss line, Warner Bros. Discovery highlighted adjusted EBITDA of $2.203 billion, which it described as relatively unchanged ex-foreign-exchange compared with the prior-year quarter. Revenue trends within segments showed a split picture: streaming-related revenue and revenues tied to distribution increased, while advertising and certain studio content categories faced pressure tied to sports programming and other timing factors described in the release.

The company’s release attributed distribution performance to continued growth and global HBO Max distribution expansion, while also noting a domestic distribution deal renewal impact that had been disclosed earlier. Advertising revenues were described as down ex-foreign-exchange, with the company pointing to the absence of the NBA and continued domestic linear audience declines. It also cited the absence of the NBA as negatively affecting the year-over-year growth rate by several percentage points within advertising comparisons.

Cash flow and balance sheet metrics were another focal point in the quarter. Warner Bros. Discovery reported cash used in operating activities of $208 million and free cash flow of negative $476 million. The company said free cash flow was affected by higher net content investment, higher tax payments, and timing of working capital, and it also singled out about $100 million of separation and transaction-related items as an unfavorable factor. At quarter end, it reported $30.1 billion of net debt and 3.4x net leverage, and it also disclosed that $3.850 billion was drawn on its revolving receivables program.

For investors, the “can it rebound?” framing in the June 5 market note comes down to whether upcoming results will show improvements that matter for both earnings quality and cash generation. In the quarter just reported, adjusted EBITDA held up while free cash flow remained negative, a combination that tends to keep the debate centered on whether investments in content and streaming can produce steadier cash over time.

One caveat is that the available market recap focuses primarily on share performance since the last report and on expectations for the next earnings cycle, without adding new operational guidance in the material reviewed here. The company did not provide, in the earnings materials cited, a detailed forecast for the next quarter’s cash flow or the exact timeline for future reporting beyond the already-completed Q1 cycle, so the near-term direction still depends on what later disclosures show. Next up for shareholders will be whether adjusted EBITDA trends and the direction of free cash flow improve, and whether deal-related items continue to dominate the reported bottom line.