Neither Bay or the studio are "keen" on the figure, and forward motion on the DC Comics adaptation rests on a pending rewrite by screenwriter Jason Fuchs (Pan, Wonder Woman).
Fuchs' rewrite would reportedly scale down the production while still keeping the interest of Bay, who is known for his big-scale action hits like Bad Boys, The Rock, and all five Transformers movies.
According to THR, Bay is currently not in negotiations with the studio nor is there an offer.
Bay most recently directed Transformers: The Last Knight, released last summer, and produced horror A Quiet Place and Transformers spinoff Bumblebee, both slated for release this year under Paramount.
Fans had a mixed response to the news on social media.
It's assumed Warner Bros. will pursue an R rating for Lobo based on the nature of the comic book character: he's a foul-mouthed, cigar-chomping alien bounty hunter, and could stand as a viable hit on the big screen in the wake of Fox's Deadpool.
That film, based on the fan-favorite Marvel mutant, grossed over $783 million worldwide — making it the highest-earning R-rated movie of all time. Its sequel is expected to draw big business this summer.
Also getting in on the R-rated superhero business is Sony, who are expected to give an R rating to Spider-Man spinoff Venom, starring Tom Hardy as the tormented anti-hero who becomes a lethal protector after bonding with an alien symbiote.
Thursday also saw developments from other corners of Warner Bros.' DC Comics universe: it was learned three-time Academy Award nominee Joaquin Phoenix is in talks to star as the Joker in the Clown Prince of Crimes' upcoming standalone origin story.
That film, from The Hangover trilogy director Todd Phillips, is described as a dark and gritty '80s crime movie in the vein of Martin Scorsese's Taxi Driver and Raging Bull. Scorsese is attached as producer.
Warner Bros. next releases Aquaman this December, followed by the light-hearted Shazam! in April 2019.