- Paramount (NASDAQ:PARA) stock is jumping after Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) disclosed that it bought a large number of the shares
- Paramount owns the Paramount+ streaming service, Pluto TV and several cable channels.
- Berkshire’s acquisition of a large stake in Paramount suggests that Warren Buffett’s company has confidence in the streaming and cable sectors
The shares of Paramount Global (NASDAQ:PARA) are rallying 13% in early trading. Warren Buffett’s company, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), sparked the surge by disclosing yesterday that it had bought almost 69 million shares of PARA stock for roughly $2.6 billion. Berkshire bought the shares last quarter.
In addition to owning Paramount+, a streaming service, Paramount controls CBS and several cable channels. It also operates the ad-supported streaming service Pluto TV.
Shari Redstone and her family own a controlling stake in Paramount.
Buffett’s Buy Suggests Confidence in PARA Stock
Berkshire’s acquisition of such a large number of Paramount’s shares suggests that Buffett has confidence in the streaming and cable sectors. Moreover, Berkshire’s decision to obtain a large stake in Paramount, in conjunction with other, large share purchases by the holding company in Q1, suggests that it has confidence in the U.S. economy. Berkshire bought a total of $51 billion in stock in Q1.
For Q1, Paramount reported higher-than-expected earnings per share, although its top line came in slightly below analysts’ average estimate. The company’s total number of streaming subscribers climbed by a net total of 6.3 million to over 62 million, while Pluto’s monthly user base came in at almost 68 million.
However, Paramount’s operating income tumbled almost 50% year over year to $775 million.
In March, InvestorPlace columnist Mark Hake argued that the value of PARA stock may have been 20% above its price at the time of writing.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.