Paramount stock, newly issued under the PSKY ticker symbol after last week’s close of the Skydance merger, is surging more than 30% late in Wednesday’s trading session.
The eruption comes as CEO David Ellison and other executives are getting set to conduct a press conference at the Paramount studio lot in L.A., a follow-up to one held last week in New York.
Optimism about the stock appears to be based in part on the company’s splashy move to acquire UFC rights in a $7.7 billion, 7-year deal. While that statement transaction rallied support on Wall Street, with shares up 8% on Tuesday, the Wednesday surge has left many market watchers scratching their heads. In the first two days of trading after the long-gestating Skydance merger finally closed, shares had drifted down, reflecting investors’ wariness of the company’s exposure to linear TV declines, among other concerns.
CNBC host Jim Cramer tweeted that Paramount resembled a “meme stock” (à la GameStop). The gains were “shocking,” he said, given the “small float.” In Wall Street parlance, the float refers to the number of shares available to the public. Ellison and backers including RedBird Capital control 70% of Paramount’s roughly 1 billion total shares.
Shares reached as high as $17.53 Wednesday before settling back around $15 as trading volume surged to more than five times its normal level. While there have been some rumblings about Paramount on Reddit chat groups like Wall Street Bets, there hasn’t been anything like the Covid frenzy that boosted AMC Entertainment, GameStop and numerous other stocks to startling levels.
Guggenheim analyst Michael Morris, in a research note Monday, said he views the UFC deal as a “meaningful indication of the company’s strategy to bolster its sports and streaming assets.” He initiated coverage of Paramount with a “buy” rating, citing what he projects to be a $300 million annual advertising opportunity in UFC rights, on top of Paramount+ subscription proceeds.
Ellison’s father, Larry Ellison, the Oracle co-founder and one of the world’s richest people, is not a direct backer of the Paramount merger. But last week in New York, David Ellison spoke admiringly of his father, saying the two discuss the business ever day, with the elder exec serving as a “mentor” to the new CEO. The presence of Larry Ellison in the background of the Paramount story certainly doesn’t hurt the perception that more big swings could be coming after the UFC deal.
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