Warner Bros. Discovery (WBD, Financial) posted a weaker-than-expected Q4, but investors didn't seem to mind. The stock surged 9.3% at 11.20am, despite a bigger-than-expected loss of $0.20 per share—far worse than the $0.02 loss Wall Street was expecting. Revenue slid 2% to $10.03 billion, missing analysts' projections. The Networks segment took a hit, with revenues down 5% due to a 17% decline in advertising, as shrinking audiences and a weaker domestic ad market weighed heavily. Meanwhile, the Studios division saw a 15% revenue jump, fueled by strong content licensing activities, but a 29% drop in gaming revenue, thanks to tough comparisons to last year's Hogwarts Legacy, offset some of the gains.

Streaming, however, was the silver lining. Direct-to-consumer revenue rose 5% to $2.65 billion, and the company added 6.4 million new subscribers, bringing the total to 116.9 million. Warner Bros. Discovery is bullish on its streaming future, aiming for 150 million global subscribers by 2026, with international deals like the Sky TV partnership fueling growth. The company also kicked off 2025 with a restructuring plan, creating two divisions—global linear networks and streaming & studios—to sharpen focus and streamline operations.

While there's still a mountain of debt to climb, with net debt standing at $34.6 billion, Warner Bros. Discovery is optimistic. Free cash flow took a 27% hit, falling to $2.43 billion, but the company is betting on international expansion, content licensing, and tighter cost controls to turn things around. As streaming keeps growing and traditional media continues to face challenges, investors are keeping a close eye on whether Warner Bros. Discovery can pull off a sustainable recovery or if this stock surge is just a temporary blip.