Paramount Stock Price Swings as Merger Offer Assessed
Paramount (PARA) dropped about 2.5% on Friday, continuing a week of volatile price action that whipsawed investors amid news of a potential merger with Skydance Media. The majority stakeholder, Shari Redstone, has sought a deal for over a year but has fended off multiple offers.
According to the Wall Street Journal, the investment firm Apollo made a $26 billion offer earlier this week. Paramount’s board rejected the deal, as it was only for its movie studio. The board reportedly wants to sell the entire company, including its streaming service Paramount+.
PARA is trading at a loss of nearly 20% this year amid broader headwinds for the media industry despite the stock market being up about 9%, per the U.S. benchmark S&P 500 index (SPX). The depressed stock price has invited criticism on the timing of any potential deal. This week, Barry Diller, founder of Fox, in a CNBC interview, stated that it would be a bad time to sell. Diller’s comments seemed to inject bearish headwinds into the stock price.
Paramount+, the company’s streaming service, has suffered losses and is operating in the red, although the bleeding has slowed recently. The company has responded with aggressive cost-cutting measures. Making a deal during a transition phase toward profitability might complicate negotiations.
According to the Wall Street Journal, Redstone and David Ellison, Skydance’s CEO, have agreed to a deal. However, it would need approval from an independent board of directors at Paramount. The directors would need to approve the merger between the two companies’ production studios, which complicates the matter. If final terms can’t be reached within 30 days, other offers are back on the table for consideration.
The uncertainty about how the negotiations and deal will play out is reflected in the stock price. As of Friday, PARA trades with an implied volatility rank (IVR) of 76.3. The expected move for the closest monthly expiration shows an expected move of +/- 0.99. Selling a put or call spread, depending on your directional bias could offer a way to trade the stock’s premium, although the low stock price makes it more attractive to play the short strike close to the money.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.