Warner Bros Stock Outlook: DC Universe Is A Cash-Generating Galaxy For Time Warner

motek 1 The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Time Warner Stock Analysis


  • The importance of DC Comics to Time Warner is again on the spotlight because of the strong box office success of the Wonder Woman movie.
  • Aside from the hit Wonder Woman film, the Injustice 2 video game is also topping the console sales charts.
  • I expect more hit movies, TV series, and video games to be made out of the DC universe.
  • Hit movies and video games are also catalysts for Warner’s merchandise licensing business.
  • I Know First has granted a bullish one-year forecast for TWX. If you like the movie and video games industry, you should go long on this stock now.

I predicted earlier this month that the Wonder Woman film could boost Time Warner’s (TWX) stock this year. Wonder Woman already achieved a worldwide gross of $653 million. Box Office Mojo’s estimate is Wonder Woman already grossed $660.88 million. This DC Extended Universe-based movie will likely hit my $1 billion worldwide gross estimate before 2017 ends. Wonder Woman is going to contribute a lot to Time Warner’s bottomline.

Warner only paid $300,000 to Israeli actress Gal Gadot to star in Wonder Woman. The film’s production budget was only $120 million. Warner already probably netted at least $200 million from box office sales. There’s also the licensing fees earned from Wonder Woman-themed merchandise sales. Warner gave WalMart (WMT) and Mattel (MAT) the rights to create and sell Wonder Woman toys. It is estimated that Wonder Woman-themed toys and other merchandises could gross $500 million to $1 billion.

Warner Bros Stock

(Source: Box Office Mojo)

The strong box office performance of Wonder Woman guarantees multiple sequels for it from Warner. Wonder Woman could become as lucrative as the Superman and Batman movie franchises. The $325 million U.S. domestic ticket sales put Wonder Woman on the same level of Batman and Superman movies.

Wonder Woman’s contribution to Warner Bros. coffers also includes the future income from DVDA/Blue-Ray sales and cable/streaming licensing rights. Overall, I expect the Wonder Woman movie to generate gross revenue of at least $1.8 billion. Warner Bros. share of that gross revenue should be around $650 million. Subtract the $120 million production budget and you get $530 million of net revenue.

That $530 million could help Warner Bros. finance its rumored upcoming Superman: Red Son movie. Wonder Woman’s revenue could also be used to help finance the other Warner movies already in production. Aquaman is another DC Comics hero movie.

Warner Bros Stock

(Source: Movie Insider)

DC Comics Is A Long-Term Tailwind For Time Warner

I expect Warner Bros. to do multiple sequel of Wonder Woman. I also expect it to produce more DC superheroes-themed movies and TV shows. DC superheroes are as famous as Disney’s (DIS) Marvel heroes. They all have loyal fans around the world which could be monetized through movies, TV, shows, merchandise sales, and video games.

Wonder Woman’s success further emphasized just how important DC Comics is to Time Warner’s future. The DC Universe video game, Injustice 2 is also ruling it at the console games weekly revenue chart since May. According to VGchartz, Injustice 2 was the world’s number one best-selling game on both the PlayStation 4 and Xbox One by May 20. According to Super Data Research, Justice 2 ended May as the no.4 top-grossing game in the world.

Super Data Research does not include video games sales in China. I expect that when June numbers are released, Injustice 2 would be no.2 or no.1 on console sales. Injustice 2 was released last May 16. Super Data Research only calculated Injustice 2’s sales for the last two weeks of May.

Warner Bros Stock

(Source: Super Data Research)

The success of the Injustice 2 video game should inspire more developers to license DC Comics superheroes to create their own hit video games. The more companies that license DC Universe assets, the better it is for Warner Bros. Warner gets an upfront licensing fee and will receive royalty payments from licensed video games.


Investors should always track the performance of Warner Bros. movies, TV shows, and video game sales. They are important to Time Warner’s topline and bottomline growth. Like Disney’s Marvel Universe subsidiary, DC Universe is a bottomless well of money for Warner Bros.

TWX will likely trade sideways for the next 2-3 months. However, I Know First is confident that this stock will post a positive return for investors if they go long now. The one-year algorithmic forecast for Time Warner is optimistic. The predictability score of 0.7 is very reassuring. A score of 0.7 pertains to the accuracy of I Know First past forecasts for TWX. Anything higher than 0.5 is great.

Time Warner Stock Analysis

As for technicals, TWX received an overall bullish score from StockTA.

Time Warner Stock Analysis

(Source: StockTA)