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 $7.8 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 strong content production capabilities, including CBS Studios, Nickelodeon Studios, and Paramount Television Studios, allow it to create top-notch original content and utilize valuable franchises. By emphasizing live sports and news, keeping up with market trends, and finding a balance between ad-supported and subscription models, PARA has strengthened its presence in the OTT market.
Despite its notable strength, PARA slipped 18.2% from its 52-week high of $14.54, achieved on May 3, 2024. Over the past three months, PARA stock gained 12.5%, outperforming the Communication Services Select Sector SPDR ETF Fund’s (XLC) marginal dip during the same time frame.
In the longer term, shares of PARA rose 14.1% over the past six months, outperforming XLC’s six-month gains of 7.4%. However, the stock climbed 1.2% over the past 52 weeks, underperforming XLC’s 17.9% returns over the last year.
To confirm the bullish trend, PARA has been trading above its 50-day and 200-day moving averages since mid-February.
PARA's underperformance is due to difficulties in meeting financial goals despite progress in streaming services like Paramount+. While successful in streaming, challenges persist in traditional media and advertising. TV media revenue and advertising revenue declined, highlighting struggles in adapting to a digital-focused industry.
On Feb. 26, PARA shares closed down more than 2% after reporting its Q4 results. Its revenue was $8 billion, missing analyst estimates of $8.1 billion. The company’s adjusted loss per share of $0.11, significantly missed analyst’s adjusted EPS estimates of $0.13.
In the competitive arena of entertainment, Warner Bros. Discovery, Inc. (WBD) has taken the lead over the stock, with a solid 32.5% gain over the past six months and 24.5% returns over the past 52 weeks.
Wall Street analysts are cautious on PARA’s prospects. The stock has a consensus “Hold” rating from the 23 analysts covering it, and the mean price target of $12.17 suggests a potential upside of 2.3% from current price levels.
