Up 40% Over The Past Month, Paramount Stock Unlikely To Rally Further In The Near Term

Paramount Global stock (NASDAQ: PARA) has rallied by close to 40% over the past month, considerably outperforming the S&P 500. Now to be fair, Paramount hasn’t seen too many positive developments of late. The stock has seen a couple of downgrades by notable brokerages and its holiday quarter results, which are due in mid-February, are also likely to be tough amid weakness in the advertising market, and also due to heavy investments in the streaming space. That said, investors are likely seeing more value in the stock, considering that it is down by over 30% over the last 12 months, trading at just about 12x estimated 2022 earnings. Moreover, the streaming business is actually making pretty good progress, with direct-to-consumer revenue expanding 38% year-over-year in the most recently reported quarter.

However, now that Paramount stock has seen a rise of about 40% over the past month, will it continue its upward trajectory in the near term, or is a sell-off imminent? Going by historical performance, there is only a 38% chance of a rise in PARA stock over the next month. There were 29 instances in the last 10 years when Paramount Global (PARA) stock saw a trailing 21-day rise of 40% or more. Out of this, 11 of those instances resulted in PARA stock rising over the subsequent one-month period (21 trading days). This historical pattern reflects 11 out of 29, or about 38% chance of rise in Paramount Global stock over the next month See our analysis on  Paramount Stock Chance of Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the last ten years data

• After moving 14% or more over five days, the stock rose in the next five days on 48% of the occasions.
• After moving 14% or more over ten days, the stock rose in the next ten days on 62% of the occasions
• After moving 40% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 38% of the occasions.

See our analysis on Paramount Global Valuation: Expensive Or Cheap for more details on Paramount’s valuation. We value Paramount stock at about $26 per share, about 13% ahead of the current market price. Check out our analysis of Paramount Global Revenue for a closer look at the company’s business model and key revenue streams.

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[1] Month-to-date and year-to-date as of 1/30/2023
[2] Cumulative total returns since the end of 2016

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