ViacomCBS shares continued to tumble following its plan to raise $3 billion, down as much as 35 per cent in the week as some media analysts marked it a ‘sell’.
ViacomCBS suffers as the streaming frenzy that lifted its shares by more than 100 per cent in the past three months has reversed. ViacomCBS shares were trading at more than $100 each as recently as March 22nd, but the bottom seemed to fall out of the stock after the company priced a $3 billion stock offering aimed in part to raise money for its streaming efforts.
The offering was praised – if half-heartedly – by most analysts, who saw the issuance as a way for ViacomCBS to take advantage of its overpriced stock. Prior to announcing the deal on March 23rd, ViacomCBS shares had risen 170 per cent since December 31st. The stock is still up 74 per cent for the year.
Analysts have got worried about the multiples at ViacomCBS – and also Discovery, which has seen a less sharp decline (20 per cent) over the past two days. In several reports, analysts questioned the logic of valuing ViacomCBS and Discovery shares at more than 20 times earnings, compared to Google, a vastly larger company, which trades at 16 times.
Nathanson added that he sees similar difficulties for Fox, Turner and NBCU as more and more pay TV customers cut the traditional TV cord. The analyst already is predicting that traditional pay TV will lose about 15 million subscribers to cord cutters by 2024. But if those losses accelerate to 25 million, Nathanson estimates it would result in single-digit advertising and affiliate fee revenue declines for Disney’s and AMC Networks’ respective linear and streaming offerings, and double-digit losses for ViacomCBS, NBCU, Fox and Turner.