By George Glover

Warner Bros. Discovery stock was sliding on Friday, having caught another downgrade as uncertainty about a potential takeover by Paramount Skydance drags on.

Shares slipped 0.7% to $19.63 in early trading. The S&P 500 was up 0.5% after personal consumption expenditures inflation data came in as expected, paving the way for the Federal Reserve to cut interest rates in October.

The move lower came after KeyBanc analyst Brandon Nispel downgraded Warner Bros. to Sector Weight from Overweight, warning that it may have become overvalued in recent weeks. The stock has surged 63% since Sept. 11, when The Wall Street Journal reported that Paramount Skydance was preparing a takeover bid. The S&P 500 has climbed just 1% over the same period.

"With the reports on a potential takeover, we feel the stock's valuation has gotten ahead of the fundamentals," Nispel wrote in a research note. "We have no way of knowing if a deal will ultimately materialize."

Nispel added that he's worried Warner Bros. could be trying to spark a bidding war, which may lead to the potential takeover collapsing. CEO David Zaslav is sounding out other bidders and is hoping for an offer of $40 a share, The New York Post reported earlier this month, citing a person with direct knowledge of the matter.

TD Cowan analyst Doug Creutz downgraded Warner Bros. earlier this month. Like Nispel, he warned that shares' stellar run since Sept. 11 may have made them overvalued.

Write to George Glover at george.glover@dowjones.com

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September 26, 2025 09:50 ET (13:50 GMT)

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