Paramount Global Stock: Price Tanks Over 10% Post Q3 Results
03 Novembro 2022 - 9:05AM
Finscreener.org
Shares of
Paramount Global (NASDAQ:
PARA) are down almost 10%
in early-market trading today after the company announced its Q3
results. In the September quarter, the media and entertainment
giant reported revenue of $6.92 billion in Q3, an increase of 5%
year over year but below estimates of $7 billion. Its adjusted
earnings per share stood at $0.39, missing estimates of $0.43 in
Q3.
Paramount Global attributed
cord-cutting and a decline in ad sales to its tepid performance in
Q3 of 2022. Valued at a market cap of $11.3 billion right now, PARA
stock price is down over 53% in the past year, trailing the broader
markets by a wide margin. Let’s see what impacted company sales in
the most recent quarter.
Why PARA stock price is down today?
Paramount Global explained sales
in the TV media segment, including its broadcast network CBS as
well as cable-TV channels and premium network Showtime slumped 5%
to $4.9 billion on the back of lower pay-TV subscribers. Due to its
lower subscriber base and a challenging macro-environment, ad sales
for these networks fell by 3% to $1.9 billion in Q3.
Similar to other companies that
generate revenue via advertisement, Paramount too acknowledged a
slowdown in this market. Further, the company emphasized it
restructured a few of its affiliate TV agreements in international
markets, shifting sales from pay TV to online
streaming.
Its direct-to-consumer streaming
segment managed to perform better. Paramount +, which is a premium
streaming subscription service, added 4.6 million customers
bringing the total number of subscribers to 46 million at the end
of Q3. But it lost close to two million subscribers as SkyShowtime,
Paramount’s joint venture with Comcast
(NASDA:
CMCSA) in the
European region, launched in the Nordics and replaced Paramount
+.
Bob Bakish, the President and CEO
of Paramount Global, explained, “In the third quarter, Paramount
continued to execute on our differentiated strategy anchored by our
broad range of popular content, our diverse portfolio of platforms,
and our truly global operating reach. That strategy continued to
drive growth in subscriptions across our streaming platforms with
Paramount+ adding 4.6M subscribers.”
Paramount + sales almost doubled
year over year as total direct-to-consumer subscribers touched 67
million. Additionally, Pluto TV, which is the leading ad-supported
streaming TV platform in the United States, reached 72 million
monthly active users, growing the total viewing hours by double
digits.
Is PARA stock a buy or a sell right now?
The shift to streaming will be
Paramount’s key revenue driver going forward. In Q3, global
direct-to-consumer sales were up 38%, while subscription revenue
grew 59% year over year. DTC sales in Q3 stood at $1.22 billion,
accounting for 1.76% of total revenue. However, this segment
remains unprofitable as its expenses stood at $1.56 billion, which
in turn reflects investments in content and international
expansion.
Analysts expect Paramount Global
sales to increase by 6.9% to $30.57 billion in 2022 and by 3.8% to
$31.73 billion in 2023. However, a higher cost base will drag its
adjusted earnings per share to $1.59 in 2023 from $3.48 in
2021.
While PARA stock is valued at
less than 0.4x forward sales, its falling profit margins will not
impress investors. A lower stock price has, however, increased its
forward dividend yield to a tasty 5.3%.
Paramount ended Q3 with more than
$7 billion in liquidity, providing it with enough flexibility to
tide over the current environment and rising
competition.
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