New York-based Paramount Global (PARA) is a leading media, streaming, and entertainment company offering television, film production, and digital content across various global platforms. With a market cap of $6.9 billion, the company owns a diverse portfolio of entertainment brands and provides streaming services, including Paramount+, Pluto TV, BET+, and Noggin.
Companies worth $2 billion or more are generally described as “mid-cap stocks,” and PARA fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the entertainment industry. PARA’s robust content production capabilities, encompassing CBS Studios, Nickelodeon Studios, and Paramount Television Studios, enable it to create high-quality, original content and leverage valuable franchises. Focusing on live sports and news, adapting to market trends, and balancing ad-supported and subscription models, has enhanced its position in the OTT market.
Despite its notable strength, PARA slipped 34.1% from its 52-week high of $15.70, achieved on Jan. 31. Over the past three months, PARA stock declined 2.6%, underperforming the Dow Jones Industrials Average’s ($DOWI) marginal gains during the same time frame.
In the longer term, shares of PARA fell marginally over the past six months and dipped 30.1% over the past 52 weeks, considerably underperforming DOWI’s six-month gains of 8.8% and solid 13% returns over the last year.
To confirm the bearish trend, PARA has been trading below its 50-day moving average since mid-December. The stock is trading below its 200-day moving average over the past year, with some fluctuations.
PARA's underperformance can be linked to the challenges faced due to the potential merger with Skydance arising due to FCC concerns over foreign influence and corporate bias over shareholder value as a result of allegations within CBS divisions.
On Nov. 8, PARA shares closed down by 4% after reporting its Q3 results. The company’s adjusted EPS of $0.49, surpassed analyst estimates of $0.24. Its revenue was $6.7 billion, beating Wall Street forecasts of $7 billion.
In the competitive arena of entertainment, Warner Bros. Discovery, Inc. (WBD) has taken the lead over the stock, with a solid 41.3% gain over the past six months and 7.6% losses over the past 52 weeks.
Wall Street analysts are cautious on PARA’s prospects. The stock has a consensus “Hold” rating from the 25 analysts covering it, and the mean price target of $11.92 suggests a potential upside of 15.3% from current price levels.
