Thank the Lawd, it’s finally over everyone, the Paramount buy-out saga has officially ended. With the companies “go-shop” period closing, and billionaire Edgar Bronfman Jr. officially dropping out of the purchase race - it’s now evident that Skydance Media will now be the new owner of the company. 

(Source: Bloomberg) 

However, while those of us (like me) who are sick and tired of a new “Paramount Buy-Out” episode popping up every week, are relieved of the news; the stock has actually tanked -7% today. Ultimately, signifying that Skydance, now being the confirmed owner, is not the happy ending Wall Street wanted.

(Source: Giphy) 

Now for those just tuning into this situation, Paramount’s “go-shop” period was like the corporate version of The Bachelor, where even though Skydance was the frontrunner - Paramount wanted to give other big swinging corporate benjamins a chance to come in with a bigger offer. 

Which is why everything *almost* went to sh*t for Skydance, as billionaire, Edgar Bronfmam Jr., swooped in with a $6 billion Hail Mary pass, hoping to be Wall Street’s Mr. Steal Yo Girl. However, in a failed attempt to bring all the money to the table, Bronfam pulled out in surprising fashion. 

(Source: Hollywood Reporter) 

Now of course, while Bronfman left the building, handing Skydance the reins to Paramount (pending regulatory approval, of course), you’d think that investors would be popping bottles over the done deal, right? Wrong. 

Instead, investors hit the panic button, and Paramount’s stock dropped like the third act of one of their horrific films (think, Marci X). 

(Source: Yahoo Finance)

The reason of course, is that the market hates uncertainty more than I hate writer's block. And while Skydance is now the official champ of the buy-out wars, there’s still a looming transition period that has investors biting their nails over what comes next.

Plus, let’s not forget the massive debt issue that Paramount is giving the new owner. For instance, Skydance plans to splash $6 billion in cash on Paramount, with $1.5 billion earmarked to clean up its debt. Sounds good on paper, but it’s a risky move… and kind of like betting your life savings that cryptocurrency will actually provide value to the world (sorry not sorry). 

(Source: Reddit) 

In addition to the chaos, another major blow for Paramount’s stock came when they announced to axe 15% of its U.S. workforce and write down $6 billion from its cable unit. Of course, this is a part of their $2 billion cost-cutting strategy, but still the impact could either save the day or send the company into a tailspin. Translation: It’s a bold strategy Cotton, let’s see if it pays off for ‘em.

(Source: Giphy) 

So obviously, all of these factors combined had investors feeling queasy today, as the stock took a nosedive of -6.40% on the day, instead of soaring on the wings of a completed deal. 

With that said though, what's the takeaway for investors? Well in short, while David Ellison, Skydance’s CEO and scion of the Ellison dynasty, has big plans for Paramount - it doesn’t come without some short-term turbulence.

(Source: The Observer) 

With Skydance aiming to turn Paramount into a lean, mean, content machine, combined with slimmed down cost-cutting measures that could rival a post-holiday detox - the new owners definitely have to nail the execution. Otherwise, this Hollywood media story will likely just go straight to DVD - aka resulting in a massive flop.

On the other hand, analysts are still somewhat optimistic with a consensus price target of $17.04, indicating a nice +61.67% upside. 

However, when you look at the technicals, well it basically has “Rekt” written all over Paramounts stock as all 17 indicators are screaming “Strong Sell” with all 15 moving averages showing more downtrend continuation.

So in the end, while Paramount may not be the most appealing addition to any portfolio, it definitely could be a nice “BTFD” opportunity in the making. However, with the flux of uncertainty, and the poor technicals the stock is being surrounded with… the only good news coming out of this news is that Paramount’s “buy-out” fiasco is over. 

Meaning, now, we can all resume back to our regularly scheduled program - The Thriller: “All Eyes On Nvidia” 

(Source: Giphy) 

At the time of this writing, Paramount is down -7.19% on the day, (down - 26.94% YTD). 

Stocks.News does not hold positions in companies mentioned in the article.