TLDR
- Paramount Skydance (PSKY) tumbled approximately 7.7% Tuesday, closing at $10.37
- Bank of America reduced price target from $13 down to $11 while maintaining “Underperform” rating
- Fitch slashed PSKY’s credit rating to junk territory; S&P placed it under negative watch
- The stock has completely wiped out the 21% rally from February 27 following the WBD acquisition announcement
- Shares are down 21.8% in 2025 and trading 47.8% beneath their 52-week peak
Paramount Skydance emerged victorious in the battle for Warner Bros. Discovery. But Wall Street is now questioning: was the prize worth the price?
Shares of PSKY tumbled approximately 7.7% during Tuesday’s trading session, settling at $10.37. This extended a bearish trend spanning six of the last seven trading days. The decline has completely erased the impressive 21% jump recorded on February 27, when the company revealed its Warner Bros. Discovery acquisition after Netflix withdrew from the competition.
Paramount Skydance Corporation Class B Common Stock, PSKY
The sharp decline followed Bank of America Securities analyst Jessica Reif Ehrlich maintaining her Underperform stance while cutting her price objective from $13 down to $11. Her assessment was direct: while the combination offers long-term strategic value, the path to achieving that value is 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 crucial. Paramount and Skydance Media only finalized their combination last summer. CEO David Ellison, whose father Larry Ellison co-founded Oracle, had just begun that integration before adding a transaction approximately double in size.
Mounting Debt Concerns Spook Investors
The balance sheet is causing investor anxiety. Upon completion of the Warner Bros. acquisition, Paramount will shoulder a net debt-to-EBITDA ratio of 4.3, even accounting for anticipated cost synergies. Management projects they can reduce this to an investment-grade 3-to-1 ratio within a three-year timeframe — however, credit rating agencies aren’t showing patience.
Fitch Ratings has demoted PSKY’s debt to below-investment-grade status. S&P Global Ratings has placed the company under negative watch. Adding to investor concerns is political oversight, particularly regarding deal financing that includes partial backing from Middle Eastern sovereign wealth funds.
The resulting entity would be a behemoth. The combination of Paramount Pictures and Warner Bros. would command roughly 30% of the domestic box office market, housing beloved franchises like Star Trek, Harry Potter, and the DC Comics universe. The transaction also unites television networks including CBS, TNT, and CNN.
Content Expenditures Continue Rising
Ellison has demonstrated an aggressive spending appetite. Paramount has already locked down rights to South Park and UFC programming through TKO Group. Bank of America observed that PSKY “paid well above the next best offer for both of these deals.”
The studio also intends to distribute 30 theatrical releases annually — 15 from each legacy studio — while expanding streaming content production. Ehrlich characterized this production volume as “a significant undertaking” with unpredictable returns.
The NFL represents the next major financial hurdle. Paramount currently possesses a portion of the league’s broadcasting rights and aims to retain them in upcoming negotiations. BofA cautioned the company faces a lose-lose scenario: either forfeiting the package due to cost, or paying a substantial premium to maintain it.
PSKY has declined 21.8% since the start of 2025. Trading at $10.31, shares sit 47.8% under their 52-week high of $19.73 reached in September 2025. The equity has experienced 27 single-day moves exceeding 5% during the past year, underscoring the extreme volatility characterizing this security.
Paramount did not provide comment regarding the Bank of America analysis.
