Paramount Global Stock Plummets 28% in 2023 After Missing Earnings and Cutting Dividend to $0.05
Paramount Global (PARA) experienced a significant 28% drop in share price in May 2023 after failing to meet profit and revenue expectations and announcing a major dividend cut.
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Highlights
- Paramount Global's (PARA) quarterly earnings fell short of analyst forecasts, prompting a reduction in its quarterly dividend.
- While the direct-to-consumer segment, including Paramount+, saw a 39% surge in sales, overall expenses rose sharply by 31%.
- Following the earnings report on May 4, 2023, PARA shares dropped 28%, marking the worst performance in the S&P 500 for the year.
Paramount Global, the parent company of CBS, Nickelodeon, and Paramount Pictures, reported earnings per share (EPS) of $0.09 for the quarter—a steep 85% decline from the previous year and roughly half the anticipated value. Revenue dipped 1% to $7.27 billion, missing estimates by $150 million.
Traditional TV operations saw an 8% revenue decrease, while the film studio division experienced a 6% decline. Conversely, the direct-to-consumer unit, which includes Paramount+, achieved robust 39% revenue growth. However, the rise in expenses by 31% contributed to an overall net loss of $511 million.
Dividend Reduction
In a move not seen since 2009, Paramount Global cut its quarterly dividend from $0.24 to $0.05. CEO Bob Bakish stated this strategy aims to "strengthen our capacity to generate long-term shareholder value as we focus on achieving streaming profitability." The dividend cut is expected to save approximately $500 million annually.
The announcement triggered a sharp 28% drop in PARA stock price on May 4, 2023, pushing shares into negative territory for the year.
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