Shares of Paramount Global (PARA) fell in after-hours trading yesterday after the company reported mixed results for the second quarter of fiscal 2025. This was also Paramount’s last quarterly performance as a standalone business, ahead of its much-awaited merger with Skydance Media. Paramount did not offer any guidance due to the anticipated transformation from the merger.
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Paramount’s adjusted earnings per share (EPS) of $0.46 exceeded the consensus estimate of $0.36, but fell sharply from the $0.54 reported in Q2FY24. Total revenue rose 1% year-over-year to $6.85 billion but fell short of the consensus estimate of $6.88 billion. PARA stock was down 5.5% in regular trading on July 31 before the results were released.
Details of Paramount’s Q2 Performance
During Q2, Paramount’s streaming services revenues increased, while traditional TV sales declined as expected. The company’s Direct-to-Consumer (DTC) revenues grew 15% year-over-year to $2.16 billion, TV Media revenue dropped by 6% to $4.01 billion, and Filmed Entertainment revenue rose 2% to $690 million.
Paramount is aiming to become a “streaming-first company.” During Q2, Paramount+ lost 1.3 million subscribers, ending the period at 77.7 million subscribers, better than the estimated 77.5 million. The decline was mainly due to the expiration of an international hard-bundle streaming contract. The media giant’s legacy TV business continues to face declining advertising and affiliate revenues, as well as ongoing cord-cutting by viewers.
Paramount’s Road Ahead with Skydance
Skydance Media, led by CEO David Ellison, is expected to complete the merger with Paramount on August 7. According to the deal, Skydance will pay $2.8 billion to acquire National Amusements, which is controlled by Paramount’s main stakeholder, the Redstone family. Following the merger, Ellison will head the combined entity, which will continue to trade on the Nasdaq under a new ticker symbol “PSKY.”
In the Q2 earnings call, Paramount’s non-executive Chair, Shari Redstone, thanked the co-CEOs and the Paramount team for the remarkable turnaround, and for delivering a “healthy business with a strong foundation for long-term growth and value creation.” She also expressed confidence in Ellison and the Skydance team to “build on Paramount’s legacy and position it for long-term success.” Investors will be closely watching the transformation of the media giant in the coming days.
Is PARA Stock a Good Buy?
Analysts remain cautious about Paramount’s long-term outlook. On TipRanks, PARA stock has a Moderate Sell consensus rating based on two Buys, six Holds, and seven Sell ratings. The average Paramount Global price target of $11.92 implies 5.2% downside potential from current levels. Year-to-date, PARA stock has gained 21.2%.
Please note that these ratings were issued before the Q2 report and may change once analysts update their recommendations.
