Global media entertainment giant Paramount Global (NASDAQ: PARA) has undergone an image makeover and rebrand after the stock collapsed as ViacomCBS. Hoping to shed its controversial past with the Redstone family drama and Archegos Capital Management’s $20 billion blast, the company has emerged as a still profitable sum of all parts media empire that might be hugely overlooked by the market.
The stock is trading at less than a fifth of its value just over a year ago. Paramount Global is a entertainment powerhouse with brands like Paramount, Pluto, Showtime, CBS, CBS Sports, Nickelodeon, MTV, Comedy Central, BET and the Smithsonian Channel.
CBS is the number 1 broadcast network in the country and it grew its market share by 20% from last year. Warren Buffett increased his shares from 68.95 million to 78.42 million via the Berkshire Hathaway Inc. (NYSE: BRK.A) 13F application for Q2 2022 on August 15. Since then, the shares have fallen as they are now being sold for 8x future earnings with an annual dividend yield of 5.15%.
Top Gun 2 finishes it
Paramount Studios has released five number 1 box office films in a row. It had the strongest film of the year, “Top Gun 2”, which grossed $1.45 billion worldwide on a budget of $170 million. The film has crossed the $714 million box office in the US, making it the 22nd highest-grossing film of all time in unadjusted worldwide revenue. The management showed impeccable timing for the release of the surprising blockbuster.
The streaming empire faces fierce competition from rivals including Netflix (NASDAQ: NFLX), The Walt Disney Company (NYSE:DIS), Amazon.com Inc. Prime Video (NADSAQ: AMZN) and Warner Brothers Discovery Inc. (NYSE: WBD). Its streaming assets include the streaming service Paramount+, which has grown to more than 43 million paid subscribers. Pluto has more than 70 million monthly active users (MAUs) on its ad-supported streaming network, and its legacy platform, Showtime OTT, still brings in subscription fees from cable TV and its streaming platform.
This is what the charts say
Using the gun cards on the weekly and daily timeframes provides an accurate picture of the landscape for PARA stock. The weekly gun chart has collapsed on the inverse pup breakdown by the $23.83 Fibonacci (fib) level. The weekly 5-period moving average (MA) resistance continues to fall at USD 20.85, followed by the weekly 15-period MA resistance at USD 23.55. The weekly lower Bollinger Bands (BBs) are still above their weekly at $15.80 market structure layer (MSL) buy trigger for $14.89.
The weekly stochastic rejected the 20 band bounce attempt and crossed back down through the 10 band to stop again for a possible bounce or mini inverse pup. The daily gun chart represents a reverse breakdown of the pups as stocks fall below the five-period daily MA at $19.41, followed by a declining 15-period daily MA at $20.14. The daily lower BBs sit at $16.45 while the stochastic stops below the 20 band for a possible crossover back down to confirm the daily MA inverse pup breakdown. Attractive pullback levels are $17.89 fib, $16.77 fib, $16.02 fib, $14.89 weekly MSL trigger, $13.84 fib, $12.09 fib, and the $12.09 fib level 10.88.
Stimulating digital growth
On August 4, Paramount released its fiscal Q2 results for the quarter ended June 2022. The company reported earnings per share (EPS) of $0.64, beating $0.62 consensus analyst estimates of $0.02 . Revenues grew 18% year-over-year (year-on-year) to $7.78 billion, ahead of consensus analyst estimates of $7.55 billion. Paramount+ added 4.9 million new subscribers and removed 1.2 million Russian subscribers to grow to more than 43 million subscribers. Ad revenue grew 25% in the DTC segment, driven by increased impressions on both Paramount+ and Pluto TV. Ad revenue declined (-6%) to $2.17 billion due to lower linear impressions and FX.