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Paramount's Shares Fall 26% YTD: How Should Investors Play the Stock?
PGREParamount (PGRE) ZACKS·2024-11-25 15:50

Core Viewpoint - Paramount Global's shares have significantly underperformed compared to its peers and the broader market, with a year-to-date decline of 26.4% against a 14.2% increase in the Zacks Consumer Discretionary sector [1] Financial Performance - In Q3 2024, Paramount's revenues fell by 6% year-over-year to 6.73billion,withDirect−to−Consumerrevenuesincreasingby106.73 billion, with Direct-to-Consumer revenues increasing by 10% while TV Media revenues and Filmed entertainment revenues dropped by 6% and 34% respectively [3] - The company anticipates a decline in licensing revenues for the full year 2024 compared to 2023, with a 9% year-over-year decrease in licensing and other revenues reported in Q3 [4] - The Zacks Consensus Estimate for Q4 2024 earnings is projected at 0.20 per share, reflecting a 25% increase over the past 30 days, while revenues are expected to reach 8.11billion,indicatingayear−over−yeargrowthof6.178.11 billion, indicating a year-over-year growth of 6.17% [12] Subscriber Growth and Content Strategy - Paramount+ added 3.5 million new subscribers in the reported quarter, reaching a total of 72 million, with revenues for the platform growing by 25% year-over-year [7] - The company expects continued subscriber growth for Paramount+ in Q4, driven by a strong lineup of original content and the CBS fall schedule [9] - Global Average Revenue Per User (ARPU) increased by 11% in Q3 2024, although growth may be tempered in Q4 due to existing pricing structures [8] Strategic Initiatives - Paramount is set to acquire Skydance Media in an all-stock transaction valued at 4.75 billion, aimed at leveraging Skydance's resources to reduce Paramount's 14billiondebt[15][17]−Thecompanyexpectstoreceivenearly14 billion debt [15][17] - The company expects to receive nearly 500 million from the sale of its equity interest in Viacom18, with the transaction anticipated to close in Q4 2024 [6] Advertising Outlook - D2C advertising revenues grew by 18% year-over-year in Q3, with expectations for double-digit growth in Q4, although TV Media advertising growth is projected to mirror the 2% decline reported in Q3 [4][5]