Streaming Strength, Stock Strain: Paramount Skydance’s Hit Quarter Comes With A Plot Twist

Shares of Paramount Skydance Corp (NASDAQ:PSKY) declined in early trading on Tuesday, even after yesterday, when the company reported upbeat first-quarter results.

• Paramount Skydance stock is showing notable weakness. What’s weighing on PSKY shares?

The highlights of the company’s results and outlook were DTC (direct-to-consumer) revenue growth and the acquisition of Warner Bros. Discovery, Inc. (NASDAQ:WBD), according to Needham.

The Paramount Skydance Analyst: Analyst Laura Martin maintained a Hold rating on the stock.

The Paramount Skydance Thesis: The company’s revenues grew 2% year-on-year to $7.3 billion, while adjusted OIBDA surged 59% year-on-year to $1.16 billion, Martin said in the note.

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She added, however, that Paramount Skydance’s adjusted earnings contracted by 13% year-on-year to 15 cents per share.

DTC revenues grew 11% year-on-year, driven by Paramount+, which was up 19%, adding 700,000 subscribers to reach 79.6 million, the analyst stated. She further noted management expects the segment’s revenue growth to accelerate in 2026, supported by:

• Subscriber growth
• ARPU (average revenue per user) growth from price hikes
• Upside from Pluto ad monetization

The Warner Bros Discovery Acquisition: Paramount Skydance’s expectation of closing its acquisition of Warner Bros Discovery by September appears “optimistic,” Martin said. “Although management is executing well on its vision (so far), this business is tiny compared to WBD, which PSKY cannot discuss until after the deal closes,” the analyst further wrote.

She added that investors who consider buying Paramount Skydance’s shares must believe that:

• The acquisition of Warner Bros Discovery will close.
• Paramount Skydance can successfully manage a much larger company.
• The film and TV businesses are not disrupted by GenAI cutting content creation costs by more than 75%.

The Q2 Outlook: Management guided to second-quarter revenues of $6.75-$6.95 billion, representing no year-on-year growth at the midpoint, and adjusted OIBDA between $900 million and $1 billion, “driven by DTC revenue growth and cost-cutting,” Martin stated.

PSKY Price Action: Shares of Paramount Skydance had declined by 4.76% to $10.60 at the time of publication on Tuesday.

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