In the intensifying streaming TV battle, Paramount Global (NASDAQ: PARA) is proving that it's better to be late to the party than to be a no-show.

The media entertainment challenger raised eyebrows when it reported that global Paramount+ subscribers topped 63 million at the end of the third quarter of this year, driving 61% year-over-year revenue growth for the platform. The numbers show that the company’s direct-to-consumer (DTC) digital strategy is gaining traction amid aggressive expansion moves. Less than three years removed from its U.S. launch, Paramount now offers streaming services in 60 countries.

The surprisingly good DTC results weren’t the only thing to catch the market off guard. Third-quarter earnings per share (EPS) were down from last year but well ahead of Wall Street expectations. It marked the second straight time that Paramount beat quarterly EPS estimates.     

Paramount’s show-stopping performance set the stage for Disney to announce similarly strong streaming results. Disney+ gained almost 7 million subscribers in fiscal Q4 and said it could be profitable by next year. Along with better-than-expected Q3 financials from Netflix, the reports have brought renewed optimism to a streaming space crippled by discretionary spending and ad spending fears.

With streaming sentiment on the upswing, much-maligned Paramount shares suddenly have momentum on their side. Since the Q3 release, the stock is up nearly 20%. $PARA is the S&P 500’s 12th best performing stock since November 2nd — and on track for its best month since 2021. 

Traders will recall that 2021 was when Paramount ran from the $30’s to over $100 in one of the year’s many parabolic short squeezes. When the now-debunked Archegos Capital Management (which fueled the rally by buying on the way up) had to dump shares, $PARA crashed quickly. This was followed by a series of disappointing quarterly performances and a huge dividend cut that sent the stock as low as $10.63 last month.   

On Friday, Paramount closed at $14.21. The stock enters this week on a five-day winning streak, its first since January 2023 when it advanced 37%. Trading volume is trending higher. 

$PARA’s resurgence has it back on the radar of swing traders and social media platforms like Reddit and Stocktwits. A sequel to the 2021 epic short squeeze may be brewing for these additional reasons.

#1 - Short interest on Paramount stock remains high

Approximately 15% of Paramount’s float is in the hands of short sellers. While not as high as it was earlier this year, this is still a significant amount. With the stock bouncing 34% off its bottom, shorts may be thinking about taking gains or cutting losses depending on the entry point. 

If $PARA keeps trending sharply higher, the bears may start sweating it out and buy to close their positions. Bullish options market activity could accelerate things into a full-blown short squeeze.

#2 - Wall Street still hates the stock

A common underlying condition for many recent short squeezes has been bearish Wall Street sentiment. The more professional analysts hate a stock, the more amateur traders want to get behind it. With Paramount, this condition is clearly present.

Since the Q3 report, eight analysts have issued sell ratings. Four have taken a neutral stance, and only one has called the stock a buy. Despite getting surprised in two straight quarters, most on the Street aren’t ready to call PARA an oversold winner. This may be more reason for social media groups to buy it.

#3 - Potential catalysts lie ahead

Among the highlights of Paramount’s Q3 report was management’s prediction that DTC losses peaked in 2022. Combined with improving streaming adoption and financials, this implies that the worst is probably over for the company. If it can continue to demonstrate that the DTC business is on the other side of streaming growing pains, heavy-handed institutional investors could take interest in the stock.

Aside from improving fundamentals, a takeover offer is a possible catalyst for $PARA. With the share price still depressed, a media company looking for a quick entry into the streaming war (or access to 63 million viewers) could make an offer to acquire Paramount. Whether the company responds favorably or not, the news could jolt the stock and spur short covering. 

The Hollywood actors union strike may be over — but the fireworks around $PARA may just be getting started.