Paramount Global Boosts Market Value as Streaming Loss Forecast Narrows

Paramount Stock

Shares of Paramount Global (NASDAQ:PARA) surged by 10% on Friday as the media company adjusted its 2023 loss forecast for its rapidly growing streaming business, which reached its investment peak a year earlier than initially targeted.

After years of pursuing subscriber growth through significant investments, streaming platforms are shifting their focus toward profitability due to pressure from investors. This shift has prompted companies like Disney+ and HBO Max to raise prices and introduce advertising to enhance their revenue.

Paramount’s stock is set to increase its market value by nearly $800 million if these gains are sustained, while its competitors, Walt Disney (NYSE:DIS) and Warner Bros Discovery (NASDAQ:WBD), saw their shares rise by 2% to 4%.

The positive momentum for media companies began on Thursday when streaming device maker Roku (NASDAQ:ROKU) reported encouraging results, sparking optimism about a rebound in the advertising market.

According to Bob Bakish, CEO of Paramount, the company anticipates that direct-to-consumer (DTC) losses in 2023 will be less than those incurred in 2022, signifying that our investment in streaming has reached its peak ahead of schedule.

Although the industry’s primary focus has shifted toward profitability, analysts are still uncertain about achieving that goal. Brokerage firm Needham suggested that Paramount might be a potential acquisition target for a larger streaming competitor, given its current market capitalization of approximately $7 billion and net debt of around $14 billion. Analysts from Needham have suggested, that the company is of a size that makes it a potential acquisition target for a larger streaming competitor, given its extensive library of film and television content, along with its sports rights and news assets.

Paramount, renowned as the owner of the studio responsible for iconic films like “Titanic” and “The Godfather,” chose not to comment on Needham’s statement.

One factor that has provided some protection against the impact of the Hollywood strikes for Paramount is its live sports content, which includes college football and the NFL, as well as its collection of international original content.

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