Ross Gerber Calls Warner Bros 'Dog Asset' Worth No More Than $15: Says Netflix, Paramount Are Both 'Vastly Overpaying' In Bidding Frenzy

Investor Ross Gerber of Gerber Kawasaki Wealth and Investment Management is not a fan of the bidding frenzy surrounding entertainment conglomerate Warner Bros Discovery Inc. (NASDAQ:WBD), and warns that buyers are significantly overvaluing the company.

Warner Bros Is A ‘Dog Asset’

On Tuesday, Gerber said that he initially assumed Netflix Inc. (NASDAQ:NFLX) had stepped into the deal mainly to push up the price for Paramount Skydance Corp. (NASDAQ:PSKY), which he noted is rapidly becoming a serious competitor, while speaking to Fox Business.

He added that while many in Hollywood are “very bullish on what Ellison is doing at Paramount Sky Dance,” Netflix's attempt to win the deal outright surprised him.

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“I’m not sure what they would do with Warner Brothers and how that would actually create value for Netflix shareholders other than protecting their moat,” he said.

Gerber did not mince words on Warner Bros Discovery's valuation. “Nobody’s made any money on Warner Brothers stock,” he said, adding that shareholders “will be happy to get their money back in cash and get out of this nightmare.”

He described the company as a “dog asset,” which, according to him, is not worth more than $15 per share, while Netflix and Paramount outbid one another at $27.75 and $30 per share, respectively. “Either way, both parties are vastly overpaying for the asset.”

The analyst noted the scarcity of major studio assets and the dynamics of a competitive bidding environment as key drivers behind the inflated offers. “It’s mostly because it’s such a rare asset to be for sale, but it’s also because they’re bidding against each other,” he said.

Gerber, whose company counts Netflix as one of its “largest” holdings, concluded by saying that the streaming giant will be “fine” regardless of how this transaction plays out.

Deal A Minefield Of Ethics And Politics

Paramount's hostile bid has drawn increased scrutiny because it is backed in part by Affinity Partners, the investment firm run by Jared Kushner, President Donald Trump's son-in-law, alongside several Middle Eastern sovereign wealth funds.

Trump, who is also close to Paramount CEO David Ellison, had said that he intended to have a direct involvement in the federal review of Netflix’s deal with the company. “I’ll be involved in that decision,” he said earlier this week, noting that the deal could give the combined entity a “very big market share” that “could be a problem.”

Shares of Warner Bros Discovery Inc. were up 3.78% on Tuesday, closing at $28.26, and are up 0.35% overnight. The stock scores high on Momentum in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.

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