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🏔️ A New Era for Paramount

🏔️ A New Era for Paramount

Plus, the danger to Microsoft and OpenAI's partnership

Pencils down, it’s time for lunch. Here’s what you missed this morning:

🟩 | Market Snapshot: All three major indexes rose, and the S&P 500 is on track for a seventh consecutive day of gains.
📰 | In focus: Fed Chair Jerome Powell stated in his second day of Capital Hill testimony that the idea of “greedflation,” or corporate price gouging, as a major factor in post-pandemic inflation is incorrect. Rather, Powell sees inflation as a combination of very strong demand and constrained supply.
🚶 | Noteworthy: Microsoft has relinquished its position on the Open AI board as regulators in the EU and the US increase antitrust scrutiny over the two companies’ partnership.
🏔️ | The Midday Trade: A New Era for Paramount. Scroll down for more.

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STREET STATS

Credit: Statista

MORNING MOVERS

LegalZoom, GE Vernova, & Intuit

LZ: LegalZoom.com’s stock fell to an all-time low after the online legal services provider cut its full-year revenue and adjusted EBITDA outlook (Investopedia)

GEV: Shares of GE Vernova rose after Goldman Sachs maintained its Buy rating and raised its price target to $196 (Benzinga)

TSLA: Tesla’s stock rose slightly after Goldman Sachs increased its price target from $175 to $248, citing the company’s strong Q2 EV deliveries (YF)

INTU: Business software company Intuit saw its shares tumble after announcing it will cut 1,800 jobs as it looks to increase AI investments (CNBC)

CVNA: Carvana’s stock surged off the back of an upgrade from Needham to Buy from Hold, citing growth opportunities in its under-utilized physical footprint (YF)

TOP CALLS

Spectrum Brands: Wells Fargo Maintains Equal-Weight on Spectrum Brands Holdings, Lowers Price Target to $87 (Trade It)

Universal Health: Cantor Fitzgerald Reiterates Underweight on Universal Health Servs, Maintains $162 Price Target (Trade It)

Kura Sushi: Roth MKM Reiterates Buy on Kura Sushi USA, Lowers Price Target to $70 (Trade It)

Tenet Healthcare: Cantor Fitzgerald Reiterates Overweight on Tenet Healthcare, Maintains $112 Price Target (Trade It)

Applied Digital: Roth MKM Maintains Buy on Applied Digital, Maintains $11 Price Target (Trade It)

Fortune Brands: Goldman Sachs Maintains Buy on Fortune Brands, Lowers Price Target to $75 (Trade It)

THE MIDDAY TRADE

A New Era for Paramount

The Deal Finally Went Through

In a deal announced Sunday, Paramount (PARA) has finally completed its merger deal with Skydance Media. Skydance founder David Ellison will become CEO of Paramount. This deal comes following Share Redstone’s, Paramount’s controlling shareholder, surprise veto of Skydance’s offer last month.

Cutting Costs

Paramount’s new management is going to face a number of challenges as its cable TV and advertising business are dwindling quickly. Ellison’s plan includes $2 billion in “cost efficiencies” and a slashing of the company’s debt. The target is a leverage ratio of 2.9 times by 2026, a figure that currently sits at 4.3 times.

Paramount currently has around 71 million streaming subscribers, and its direct-to-consumer unit accounted for an operating loss of around $1.4 billion in the 12 months up to March.

Sky(dance) Is the Limit

However, the merger means that Paramount is now under the control of a group that has had a number of box-office and TV successes. Additionally, Skydance will have around 70% of its outstanding equity, meaning it has much more skin in the game than its previous ownership.

The future is still murky for Paramount, but some believe that its stock has nowhere to go but up.

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Check out the full list of cards you can use to do this here.

SURVEY THE STREET

Bad news for Samsung: its workers have declared an indefinite strike.

The National Samsung Electronics Union, with 31,000 members, has joined the company’s 6,000-member semiconductor division that went on strike earlier in the week.

The union is dissatisfied with pay and the lack of performance bonuses, especially since the company reported a 10-fold jump in profits for the first three months of 2024.

While this is certainly a headache for Samsung, it could impact the global supply chain, particularly in terms of memory chip supplies.