Paramount’s stock surged Tuesday after Warren Buffett’s Berkshire Hathaway disclosed in public filings that it dramatically upped its stake in the company that houses Paramount Pictures, CBS, Showtime, Paramount+, Pluto TV, and other key brands. As a result of the billionaire’s confidence, shares in Paramount (PARA) soared more than 9 percent.
Buffett’s Berkshire Hathaway now has 91 million shares of Paramount. According to Wells Fargo equity analyst Steven Cahall, with around 15 percent of class B shares valued at $1.7 billion, Buffett’s company is Paramount’s largest outside investor.
In mid-May, Buffett disclosed his investment company purchased 75 million shares of PARA. At the time, PARA was trading much higher and the stake was worth $2.6 billion. That revelation goosed the stock from under $27 per share to the low $30s. Weeks later, Paramount’s “Top Gun: Maverick” came out and eventually became the year’s biggest box-office hit to the tune of a $1.4 billion worldwide, carrying shares even higher.
By early November, PARA traded for less than $16 per share. Before a recent rally, including Buffett’s disclosure late Monday, it had been a November not to remember for Paramount Global. A federal judge blocked its $2.2 billion sale of publisher Simon & Schuster to Penguin Random House, it missed on its Q3 earnings and revenue forecasts, and Wells Fargo downgraded PARA stock to a “Sell.”
That said, Paramount+ in its fiscal third quarter added 4.6 million subscribers for 46 million overall; Buffett’s increased stake could point to his optimism about its place in the streaming wars. It could also mean that Paramount is a ripe acquisition target, as some analysts suggested. Paramount chief Bob Bakish himself hinted in March that the company is in part positioning itself to be purchased by a larger entity.
KeyBanc Capital Markets analysts interpreted this week’s double-down investment by Buffett as a sign that Berkshire believes Paramount Global “will be successful in the streaming wars or is a likely acquisition target.” To KeyBanc analysts Brandon Nispel and Evan Young, the latter is the more realistic option. “Likely buyers would be a tech company, or other Media peers, which could leverage PARA’s library and film studio to immediately become a top competitor,” they wrote.