Paramount Global for sale latest - Variety: Paramount Skydance Shares End Roller-Coaster, Memestock-Fueled Week Up 30%, Boosting Market Cap by $2 Billion

Story from Variety:

Paramount Skydance, over its first full week on the stock market under new owners, saw its stock jump 30% — and boomed as much as 60% in intraday trading Wednesday. But what triggered the investor enthusiasm wasn’t totally clear.

The spike in share price, which increased the company’s market capitalization by roughly $2 billion, did not appear to be correlated with any notable news from Paramount Skydance, led by chairman and CEO David Ellison.

On Aug. 12-13, Paramount Skydance shares soared 48%, the biggest two-day gain ever for the stock dating back to predecessor company Viacom’s IPO in 1990, per Dow Jones Market Data. Over the following two days, Paramount Skydance’s shares settled back down, closing Friday at $13.72 per share.

Wall Street analysts were at a loss to pinpoint what had driven up the stock, given the absence of material news or announcements. The surge in Paramount Skydance shares looked similar to the massive pops seen by “meme stocks,” in which individual retail investors rally around buying up a certain stock. In some cases, as with AMC Entertainment, the groups of small investors were aiming to drive up the stock price in order to generate losses for short-sellers.

“When a stock is up 37% in a day and 48% in two days — all, in our view, without fundamental news — what’s there for a fundamental research analyst to say?” Evercore ISI analyst Kutgun Maral wrote in an Aug. 14 note to clients about the activity.

Paramount Skydance shares began trading on Nasdaq under the symbol “PSKY” on Aug. 7, after the roughly $8 billion deal officially closed. (Former Class B shareholders of Paramount Global were able to choose to convert their shares to the new issue or cash out at $15/share.) On day one, the stock closed up 6.3%, but then fell 13.8% over the next two trading days.

Paramount did have major news on Monday: Ellison announced a seven-year, $7.7 billion deal with UFC to secure MMA rights exclusively for Paramount+, a signal of the new regime’s appetite to spend on content and grow the streaming business. But shares of Paramount closed down 3.7% for the day on Aug. 11.

Otherwise, Ellison and the new team of top execs he installed (with the exception of former CBS chief George Cheeks, who is now head of “TV Media”) didn’t have much new to say that they haven’t said already. Ellison reiterated his belief the new management could chop more than $2 billion in costs out of the company, in part by consolidating Paramount+ and Pluto TV onto one tech platform. Paramount Skydance president Jeff Shell told reporters at an event last week in New York that he expected restructuring actions including layoffs to be announced as early as November.

Meanwhile, at a press meeting this Wednesday in L.A., Ellison said he wasn’t looking to sell or spin off Paramount’s cable networks, including BET, but would “redefine” them for the streaming era. Cindy Holland, the former Netflix VP of original content who is Paramount Skydance’s head of streaming, said that “made-for-streaming movies” were “not a priority.” Interesting stuff, but not what you would consider market-moving news.

Part of what has fueled the volatility for the Paramount stock is the relatively small number of shares available for public trading. The new Paramount has about 1 billion shares outstanding; of those, only about 30% are available for public trades. The remaining 70% of Paramount Skydance’s shares are held by the Ellison family (with Oracle founder Larry Ellison having financed the majority of the Paramount Global takeover) and its investment partner Gerry Cardinale’s RedBird Capital. The Ellisons hold 100% of the voting power in the new Skydance; the Class B shares of the company that trade on Nasdaq are nonvoting shares.

The deal creating Paramount Skydance, which is calling itself “Paramount, a Skydance Corporation,” closed more than a year after the initial agreement between Skydance and RedBird and Shari Redstone, who was the controlling shareholder of Paramount Global.

Evercore ISI’s Maral said that in the near term, announcements from Paramount Skydance’s “emboldened management team” are more likely to center on “incremental investments to fuel future growth” — like content deals with UFC and the “South Park” creators — as opposed to “a value-crystallizing strategic action.” The analyst maintained an “in line” rating on PSKY, “awaiting a comprehensive strategic and financial update from the new management team and greater clarity on where shares will settle.”