Trading in Warner Bros. Discovery, Inc. (NASDAQ:WBD) is quiet on Thursday. But that hasn't been the case lately. The shares have soared amid a bidding war for the company.
• Warner Bros. Discovery stock is trading at elevated levels. What should traders watch with WBD?
But if no more bidders come along, there is a good chance the shares will run into resistance soon. This is why Warner Bros. is the Stock of the Day.
Netflix, Inc. (NASDAQ:NFLX) entered a deal last Friday to buy Warner Bros. for $27.75 per share. On Monday, Paramount Skydance Corporation (NASDAQ:PSKY) responded by going directly to investors with a hostile bid of $30 per share.
Some Warner Bros. shareholders are hoping an even higher bid will come along. But if it doesn't, an increase in price due to anticipation of a deal could stall out around $31.25.
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“Sell at former peaks” is an old Wall Street adage. It refers to when a stock reaches a price that had previously been a peak or top, there is a good chance that it hits resistance once more and rolls over again.
As you can see on the chart, there was resistance for Warner Bros. around $31.25 in early 2022. There are people who bought shares back then who have held onto their losing positions since.
A number of them have decided that if they could eventually do so, they would sell their shares at breakeven. This means that if the price returns to $31.25, they will be placing sell orders.
If there is a large number or concentration of these orders, it could result in forming resistance at the price again. This could put a ceiling on the price.
Some old Wall Street adages and expressions are not “old wives’ tales.” Their origins have a factual basis.
If Warner Bros. does reach levels around $31.25, it may be a logical place to have a sell order.
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