Linear Pay TV pressures affected Paramount Global in Q1

Ariel Fund highlighted stocks like Paramount Global, in the first quarter 2024 investor letter. Paramount Global is a media, streaming, and entertainment company. The one-month return of Paramount Global was -7.32%, and its shares lost 24.88% of their value over the last 52 weeks. On June 6, 2024, Paramount Global stock closed at $11.97 per share with a market capitalization of $8.443 billion.

Ariel Fund stated the following regarding Paramount Global in its first quarter 2024 investor letter:
“By comparison, entertainment company, Paramount Global, traded lower in the quarter as linear Pay TV pressures including shifts in viewership, subscriber erosion, softer ad revenues and continued losses in its streaming business presented headwinds. Despite the negative price action, management expects the consolidated company to deliver significant earnings growth in 2024 and reach Paramount+ domestic profitability in 2025. Meanwhile, PARA remains laser focused on optimizing its cost base while improving monetization for its streaming business, which should drive free cash flow in 2024 and beyond. After many calls with management we have a high degree of confidence that the value of Paramount’s proprietary content remains meaningfully underappreciated at current trading levels. However, recent rumors regarding merger talks that forego competitive bidding in favor of an exclusive discussion with Skydance, where the control premium would differentiate the financial position of a single shareholder over all other shareholders is averse to the fair market value of the company. This action along with a new proposal for changes at the board level have heightened our concerns around the company’s ability to act on behalf of all shareholders.”

Paramount Global is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Paramount Global at the end of the first quarter which was 43 in the previous quarter. While we acknowledge the potential of Paramount Global as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors. Insider Monkey