A media company can change its name but not its stock chart
A media giant recently rebranded itself, ditching two venerable names to focus on its streaming efforts.
But while that move may make sense, Real Money Pro’s Stephen Guilfoyle isn’t sticking around.
“I’m out of patience with the future Paramount Global (PARA) Guilfoyle recently wrote on Real Money Pro. “I will try to get out of the entertainment giant.”
Guilfoyle’s disenchantment with the former ViacomCBS is twofold. For one thing, it’s “hard to go up (or down) when a stock is trading sideways for nine or 10 months,” he wrote.
More importantly, the company faces big spending needs as it tries to grow its streaming business.
Paramount “now targets 100 million streaming subscribers by 2024, up from the previously set target of 65 million to 75 million, while increasing DTC (direct-to-consumer) revenue to $9 billion by 2024 per compared to the previous forecast of $6 billion,” Guilfoyle wrote. . “The plan appears to be to fund what needs to grow even at a loss by subsidizing that growth with what appears to be a declining but still very profitable business, cable television,” he added.
This will add to a situation where the tangible book value is already negative. “We don’t like that. We don’t like negative free cash flow either,” Guilfoyle said.
It’s not that Paramount’s plans won’t work. The company is “moving in the right direction in terms of revamping as well as content creation. The show ‘1883’ is probably one of the best shows in streaming history,” according to Guilfoyle. “That said, there is no way to avoid the increased pressure on margins that this company is likely to face in the near to intermediate future.”