Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Paramount Global, MVA calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Fair value of debt. See details »
2 Invested capital. See details »
The financial trajectory between 2018 and 2022 is characterized by a significant divergence between the growth of invested capital and the volatility of market valuation, resulting in a transition from substantial value creation to significant value destruction.
- Market Value Volatility
- The market value experienced a period of rapid expansion, increasing from US$ 30,016 million in 2018 to a peak of US$ 68,038 million in 2020. This growth was followed by a sustained contraction over the subsequent two years, with the valuation declining to US$ 31,542 million by the end of 2022, effectively erasing the gains achieved during the peak period.
- Invested Capital Growth
- Invested capital followed a consistent upward trend for most of the analyzed period, rising from US$ 15,419 million in 2018 to a peak of US$ 45,938 million in 2021. Although a slight reduction to US$ 44,287 million was recorded in 2022, the total capital base remained nearly three times higher than the initial 2018 level.
- Market Value Added (MVA) Erosion
- MVA exhibited extreme fluctuations, reflecting the gap between the market's perception of the firm and the capital utilized. After reaching a maximum of US$ 26,969 million in 2020, the MVA collapsed rapidly. By December 31, 2022, the MVA shifted to a negative value of US$ 12,745 million, signaling that the company's market value had fallen below the total amount of capital invested in its operations.
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MVA Spread Ratio
Paramount Global, MVA spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | (12,745) | 1,554) | 26,969) | 4,466) | 14,596) | |
| Invested capital2 | 44,287) | 45,938) | 41,069) | 37,244) | 15,419) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | -28.78% | 3.38% | 65.67% | 11.99% | 94.66% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 533.88% | 988.84% | — | — | — | |
| Comcast Corp. | 23.25% | 50.35% | — | — | — | |
| Meta Platforms Inc. | 380.86% | 579.06% | — | — | — | |
| Netflix Inc. | 371.80% | 453.21% | — | — | — | |
| Walt Disney Co. | 34.30% | 103.57% | 101.22% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × -12,745 ÷ 44,287 = -28.78%
4 Click competitor name to see calculations.
An analysis of the financial metrics from 2018 to 2022 reveals a period of extreme volatility in value creation, culminating in a transition from significant market value added to substantial value destruction. While invested capital expanded considerably over the five-year period, the company's ability to generate a market premium over that capital deteriorated sharply.
- Market Value Added (MVA)
- The MVA exhibited severe fluctuations, starting at 14,596 million USD in 2018 and peaking at 26,969 million USD in 2020. However, this peak was followed by a precipitous decline, falling to 1,554 million USD in 2021 and crashing to negative 12,745 million USD by December 31, 2022. This negative trajectory indicates that by the end of the period, the market value of the firm was significantly lower than the capital invested in it.
- Invested Capital
- Invested capital showed a consistent upward trend for the majority of the period. From a base of 15,419 million USD in 2018, capital grew rapidly to 37,244 million USD in 2019 and continued to rise, reaching a peak of 45,938 million USD in 2021. A slight contraction occurred in 2022, with capital settling at 44,287 million USD.
- MVA Spread Ratio
- The MVA spread ratio mirrors the volatility of the MVA, reflecting the diminishing efficiency of capital utilization. The ratio began at a high of 94.66% in 2018, plummeted to 11.99% in 2019, and saw a temporary recovery to 65.67% in 2020. Subsequently, the ratio collapsed to 3.38% in 2021 and entered negative territory at -28.78% in 2022. This trend confirms a systemic failure to maintain a market value above the cost of invested capital toward the end of the analyzed timeframe.
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MVA Margin
Paramount Global, MVA margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Market value added (MVA)1 | (12,745) | 1,554) | 26,969) | 4,466) | 14,596) | |
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Add: Increase (decrease) in deferred revenues | (140) | 80) | 212) | 165) | (10) | |
| Adjusted revenues | 30,014) | 28,666) | 25,497) | 27,977) | 14,504) | |
| Performance Ratio | ||||||
| MVA margin2 | -42.46% | 5.42% | 105.77% | 15.96% | 100.64% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Alphabet Inc. | 381.04% | 655.85% | — | — | — | |
| Comcast Corp. | 41.05% | 99.16% | — | — | — | |
| Meta Platforms Inc. | 332.57% | 454.84% | — | — | — | |
| Netflix Inc. | 443.55% | 529.22% | — | — | — | |
| Walt Disney Co. | 70.59% | 263.91% | 272.21% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × -12,745 ÷ 30,014 = -42.46%
3 Click competitor name to see calculations.
The financial results from 2018 to 2022 reveal a period of extreme volatility in market value creation, characterized by a dramatic shift from substantial value addition to significant value destruction, despite a general increase in top-line revenue.
- Market Value Added (MVA) Trends
- MVA exhibited highly inconsistent performance over the five-year period. After an initial decline from 14,596 million US$ in 2018 to 4,466 million US$ in 2019, value added peaked at 26,969 million US$ in 2020. However, this peak was followed by a sharp contraction to 1,554 million US$ in 2021 and a final collapse into negative territory, reaching -12,745 million US$ by December 31, 2022.
- Adjusted Revenue Performance
- Adjusted revenues demonstrated a steady growth trajectory, contrasting with the instability of market value. Revenues increased from 14,504 million US$ in 2018 to 30,014 million US$ in 2022. Although a slight dip occurred in 2020, the overall trend reflects a doubling of revenue over the analyzed period.
- MVA Margin Interpretation
- The MVA margin highlights a widening disconnect between revenue growth and market valuation. The margin reached highs of 100.64% in 2018 and 105.77% in 2020, suggesting that the market highly valued the company's growth potential relative to its size. This correlation broke down in 2021, as the margin fell to 5.42%, and culminated in a negative margin of -42.46% in 2022. The transition to a negative MVA margin indicates that the increase in adjusted revenues was insufficient to offset a decline in market capitalization, resulting in a state where the market value is lower than the capital invested in the business.
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