Skydance Will Focus on ‘Embracing Technology’ as SKYD Stock Debuts After Merger. Is It Enough?

After months of twists and turns, David Ellison’s effort to bring two of Hollywood’s biggest studios under one roof has finally become reality. On Tuesday, Oct. 6, the $111 billion Paramount-Warner Bros. Discovery merger officially closed, with Skydance (SKYD) Class B shares debuting on the New York Stock Exchange under the ticker “SKYD.” WBD shares ceased trading on Nasdaq the same day.

The harder part now is making the combined company work. CEO Ellison believes technology will be central to that effort, with Skydance aiming to “embrace technology” as a fundamental company capability rather than simply another buzzword in a presentation. The strategy is particularly important as the company faces competition from both traditional entertainment giants and businesses whose expertise was built around technology.

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New co-CEO Ynon Kreiz has echoed that approach, saying technology can help Skydance improve its operations, strengthen the creative process, and find better ways to engage consumers. Artificial intelligence (AI) is also expected to play a role across the business, with Ellison describing it as a potential “force multiplier” for the newly merged company.

That strategy will be tested in an increasingly competitive entertainment market. Netflix (NFLX), Disney (DIS), and other media giants are chasing the same audiences, while Apple (AAPL), Amazon.com (AMZN), and Meta Platforms (META) bring substantial technology capabilities to the industry.

The scale of the challenge is considerable. The newly combined company expects nearly $70 billion in annual revenue but also inherits about $80 billion in net debt. After such a transformative merger, let’s see whether technology can help make that size work.

About Skydance Stock

Headquartered in New York, Skydance is now the corporate home of Paramount and Warner Bros. Discovery following the acquisition’s completion. The newly expanded company has a broad footprint spanning film and television production, broadcasting, streaming, news, sports, advertising, and global content distribution.

The company’s portfolio includes some of the biggest names in media, including Paramount Pictures, Warner Bros., CBS, HBO, Nickelodeon, MTV, BET, Comedy Central, Paramount+, Pluto TV, CNN, CBS Sports, and TNT Sports.

The stock’s recent performance has been weak, though the numbers need to be viewed in the context of the merger. Before the transaction, the shares represented the pre-merger Paramount entity.

Against that backdrop, the stock is down 52% over the past 52 weeks and 33.7% in 2026. The decline has been even sharper in the near term, with shares plunging 18.1% over the past month.

The company also pays an annual dividend of $0.20 per share, giving the stock a yield of 2.25%. The latest payment of $0.05 per share was paid on Thursday, Oct. 1 to shareholders of record as of Tuesday, Sept. 15.

Paramount’s Q2 Results Ahead of the Merger

Before the merger, Paramount Skydance reported its Q2 FY2026 results on August 4, showing meaningful progress on profitability even as the continued decline of linear television kept revenue growth in check.

Revenue increased 1% year over year (YOY) to $6.9 billion, while diluted EPS came in at $0.04. The bigger improvement came below the revenue line. Adjusted EBITDA rose 27.3% from the year-ago value to $1.1 billion, expanding the margin to 15.9%. Operating income reached $475 million, including $153 million in transaction-related costs.

Direct-to-Consumer (DTC) led the quarter’s stronger performance. Revenue grew 9% YOY to $2.5 billion, while Paramount+ revenue climbed 16%, supported by approximately 6% subscriber growth and a 12% increase in average revenue per user (ARPU).

The platform added about 2 million subscribers, helped by UFC, FIFA, and original programming, while churn fell to its lowest level in Paramount+ history. This subscriber and revenue growth also translated into stronger profitability. DTC adjusted EBITDA jumped 44% YOY to $366 million.

Studios delivered another positive result, with revenue up 16% YOY to $1.3 billion, driven by stronger third-party television deliveries and licensing. Adjusted EBITDA improved to $36 million from a $31 million loss in the prior year’s period. The film slate, led by Scary Movieexceeded expectations, although theatrical revenue remained pressured by the challenging comparison with Mission: Impossible — The Final Reckoning.

TV Media, meanwhile, remained the biggest drag. Revenue declined 9% YOY to $3.1 billion, as advertising fell 14% and affiliate revenue dropped 6% amid continued linear-TV weakness and the absence of prior-year NCAA advertising. Even so, adjusted EBITDA increased to $1.1 billion, lifting the margin to 34.0%, as disciplined cost management more than offset the revenue decline.

Looking ahead, analysts expect Skydance’s Q3 FY2026 EPS to decline 100% YOY to $0.23, while full FY2026 earnings will see a 100% increase in losses to $0.53. However, the outlook improves considerably in FY2027, when the bottom line regains profitability with earnings of $0.76.

What Do Analysts Expect for Skydance Stock?

Wall Street is hardly convinced just yet. Barclays analyst Kannan Venkateshwar maintained an “Underweight” rating on SKYD stock after the merger and trimmed his price target to $7 from $8, citing the challenges around leverage, integration, and turning the enlarged company’s scale into tangible value.

Overall, analysts currently lean toward an overall rating of “Hold.” Of 22 analysts covering Skydance, two rate the stock a “Strong Buy,” one has a “Moderate Buy,” 12 recommend “Hold,” one has a “Moderate Sell,” and six give it a “Strong Sell” rating.

Even so, the consensus target offers some breathing room. The average price target of $10.53 implies roughly 18.4% upside from current levels, while the $16 Street-High target suggests nearly 80% upside.

On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com