Key Takeaways
- Paramount Skydance (PSKY) declined approximately 7.7% on Tuesday, closing at $10.37
- Bank of America lowered its price target from $13 down to $11 while maintaining an “Underperform” rating
- Fitch reduced PSKY’s credit rating to “junk” territory; S&P placed the stock on “negative watch”
- Shares have completely wiped out the 21% rally from February 27 following the WBD acquisition announcement
- Year-to-date, PSKY has declined 21.8% and trades 47.8% beneath its 52-week peak
After emerging victorious in the battle for Warner Bros. Discovery, Paramount Skydance now faces a critical question from Wall Street: was the price worth paying?
Shares of PSKY tumbled approximately 7.7% during Tuesday’s trading session, settling at $10.37. This marked the sixth decline in seven consecutive sessions. The stock has now completely erased the impressive 21% jump witnessed on February 27, the day Paramount revealed its acquisition of Warner Bros. Discovery following Netflix’s withdrawal from bidding.
Paramount Skydance Corporation Class B Common Stock, PSKY
The sharp decline followed Bank of America Securities analyst Jessica Reif Ehrlich’s decision to maintain her Underperform rating while cutting her price objective from $13 down to $11. Her assessment painted a cautious picture: while the combination offers long-term promise, the path forward remains fraught with challenges and uncertainty.
“PSKY had already been undergoing an integration process from the Paramount Skydance merger — which had only just begun — and now would be adding an even larger entity to the mix,” Ehrlich stated.
The sequence of events is particularly significant. Paramount and Skydance Media finalized their merger just last summer. CEO David Ellison, whose father Larry Ellison co-founded Oracle, had only recently embarked on that integration when he announced an acquisition approximately double in scale.
Mounting Debt Concerns Trouble Investors
The company’s financial profile has become a source of anxiety for shareholders. Upon closing the Warner Bros. acquisition, Paramount will shoulder a net debt-to-EBITDA ratio of 4.3, even accounting for anticipated cost savings from synergies. Management believes it can reduce this leverage to an investment-grade 3-to-1 ratio within a three-year timeframe — however, credit rating agencies are expressing skepticism.
Fitch Ratings moved PSKY’s credit rating into junk territory. S&P Global Ratings assigned negative watch status. The deal has also attracted political attention due to partial financing involving Middle Eastern sovereign wealth funds.
The merged entity would create an entertainment powerhouse. Combined, Paramount Pictures and Warner Bros. command roughly 30% of the domestic box office market, with valuable intellectual property including Star Trek, Harry Potter, and DC Comics franchises. The deal also unites television networks such as CBS, TNT, and CNN under one corporate umbrella.
Aggressive Content Investment Strategy
Ellison has demonstrated a willingness to spend aggressively on content. Paramount has already locked in rights to South Park and secured UFC events through an arrangement with TKO Group. Bank of America observers noted that PSKY “paid well above the next best offer for both of these deals.”
The studio plans an ambitious theatrical release schedule of 30 films annually — 15 from each legacy studio — while simultaneously expanding streaming content production. Ehrlich characterized this output level as “a significant undertaking” with unpredictable returns.
NFL broadcasting rights represent another looming financial challenge. Paramount currently holds a portion of the league’s media rights package and aims to retain them in upcoming negotiations. BofA cautioned the company faces a difficult choice: either lose the package to competitors on price, or accept a substantial cost increase to maintain its position.
PSKY has fallen 21.8% since the start of the year. Trading at $10.31, shares sit 47.8% below the 52-week high of $19.73 reached in September 2025. The stock has experienced 27 daily moves exceeding 5% over the past twelve months, underscoring the extreme volatility surrounding this name.
Paramount representatives declined to provide comment regarding the Bank of America analyst report.
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