Nice analysis, but I think you may be drastically underestimating the overhang. Roughly 50% of all stock trading is by high frequency bots who round trip and don't hold their positions...so it is just padded noise to the volume levels. You are also assuming that all of the remaining volume represents selling by ex-T shareholders, and not by short term holders or ex-DISCA holders. If you relax your assumptions, you probably have a share overhang that lasts well thru summer especially as trading volume normalizes.
Is it possible to accurately predict a range of fcf over the next 10 years? If so, how will that be allocated. Surely the company will use a chunk if cash flow to delever. Is there evidence that this company has a capital allocation framewok? If in 5 years after delevering, the company sells at 5x fcf will they retire shares? Pay a dividend? Is there a large shareholder or conteol entity that can steer the company to do what is value accretive to minority shareholders? Would be thankful for any feedback.
HI Scrooge. Have you revisited this thesis recently? Two years out it's halved, but the cash flows are there, debt falling, etc. This one is a tough nut. Curious what you think now..
Thanks for the write up! Is the guided fcf figure ‘to the firm’ or ‘to the equity’? Would think that it’s to the firm, and so a ev/fcf of 12x would be more appropriate?
Nice analysis, but I think you may be drastically underestimating the overhang. Roughly 50% of all stock trading is by high frequency bots who round trip and don't hold their positions...so it is just padded noise to the volume levels. You are also assuming that all of the remaining volume represents selling by ex-T shareholders, and not by short term holders or ex-DISCA holders. If you relax your assumptions, you probably have a share overhang that lasts well thru summer especially as trading volume normalizes.
Love this article! Very well done. We came to very similar conclusions + valuation despite me just stumbling across your article a few minutes ago https://scroogecapital.substack.com/p/warner-bros-discovery-wbd?r=orfi8&utm_medium=ios
Is it possible to accurately predict a range of fcf over the next 10 years? If so, how will that be allocated. Surely the company will use a chunk if cash flow to delever. Is there evidence that this company has a capital allocation framewok? If in 5 years after delevering, the company sells at 5x fcf will they retire shares? Pay a dividend? Is there a large shareholder or conteol entity that can steer the company to do what is value accretive to minority shareholders? Would be thankful for any feedback.
Excellent write-up summarizing the situation, thank you
Absolutely fantastic piece of work! I greatly enjoyed it. Thank you very much.
I really enjoyed the Analysis, thank you very much!
HI Scrooge. Have you revisited this thesis recently? Two years out it's halved, but the cash flows are there, debt falling, etc. This one is a tough nut. Curious what you think now..
Thanks
Thanks for the write up! Is the guided fcf figure ‘to the firm’ or ‘to the equity’? Would think that it’s to the firm, and so a ev/fcf of 12x would be more appropriate?