What happened

Shares of entertainment name Paramount Global (PARA -1.45%) ended Tuesday's session down 7% after its CEO cautioned shareholders the current quarter's bottom line wouldn't be as strong as initially expected.

So what

It's a bit of a contradiction.

Speaking at an industry conference hosted by UBS, Paramount CEO Bob Bakish suggested on Tuesday that his company's flagship streaming service, Paramount+, saw record-breaking subscriber growth as well as revenue in the month of November. However, during the very same presentation, Bakish conceded the weakening advertising market was likely to hurt the media company's overall fourth-quarter results. Although he didn't offer specifics, Bakish did comment: "We do now see the fourth quarter coming in a bit below the third quarter" -- a third quarter that already fell short of earnings and revenue estimates thanks to a 5% year-over-year revenue slide for its advertising/pay-TV business.

The bulk of Paramount's revenue still comes from television and films rather than its streaming platforms like Paramount+ and Pluto TV, of course. Its direct-to-consumer services are still the prioritized growth engine though, with Bakish indicating the company's prepared to spend $6 billion on streaming content in 2024, well up from last year's $2 billion worth of streaming-content outlays.

As of Q3, Paramount's streaming operations remain unprofitable. There's no clarity as to when --or even if -- the intended increase of the company's streaming budget will lead to enough subscriber growth to pull the business out of the red and into the black.

Now what

To be fair, investors may be looking at Paramount in a tainted light. Walt Disney's direct-to-consumer arm also remains unprofitable, and Warner Bros. Discovery CEO David Zaslav recently explained his priority is getting cash flowing again. The implication is that Warner's current cash-flow situation is at least a bit challenged. Both are red flags for Paramount's streaming operations.

Those are the dots investors are connecting today anyway.

Only time will tell how soon Paramount's fading TV business, its budding streaming business, and its film business will stabilize in a rapidly changing entertainment environment. Investors' knee-jerk response today makes sense, however. There's a great deal of spending in the cards for a future that's nearly impossible to predict with any precision. This may be a stock best left on your long-term watchlist, waiting for firmer evidence that its streaming services can (and eventually will) carry their weight.