What happened
Shares of Paramount Global (PARA +0.00%) jumped 15% on Tuesday after Warren Buffett's Berkshire Hathaway disclosed a significant ownership position in the streaming service provider.
NASDAQ: PARA
Key Data Points
So what
Berkshire purchased nearly 69 million shares of Paramount stock in the first quarter. Those shares were valued at more than $2.6 billion at the end of March.
The media company was formerly known as ViacomCBS. It changed its name to Paramount Global in February to signify its commitment to its new streaming service, Paramount+. The company also owns a collection of broadcast TV and cable properties, including CBS, Showtime, Nickelodeon, MTV, CMT, Comedy Central, and BET.
Image source: Getty Images.
Paramount has been selling off non-core assets to raise the capital it needs to fund its streaming growth initiatives. Its fledgling Paramount+ streaming service has gained customers at a rapid pace, including 6.8 million subscribers in the first quarter alone. The company's total global streaming subscriber count exceeded 62 million at the end of March.
Paramount expects that figure, which also includes subscribers to its Showtime streaming service, to grow to 100 million by the end of 2024. Management is targeting $9 billion in streaming revenue by that time.
Now what
Paramount is sure to face a host of challenges as it strives to achieve those goals. Competition is fierce and intensifying. Formidable rivals -- including Netflix, Amazon.com, and Apple -- plan to spend heavily on content in the coming years as they battle over market share.
Still, Berkshire may have been tempted by Paramount's value-priced stock. Even after today's gains, Paramount's shares trade for roughly 15 times its projected earnings in 2023. That's a bargain compared to the steep valuations of many of its streaming competitors.
