Chattanooga Times Free Press
ViacomCBS’ stock slump
ViacomCBS should be riding high. Its rebranded and reworked Paramount+ streaming service launched to decent reviews, and it reported a stronger than expected fourth quarter profit. So why is its stock off 56% since its recent high of $100.34?
Blame a hefty proposed stock offering, spooked analysts and jittery investors.
ViacomCBS shares rose steadily throughout 2020, then spiked in early 2021. Management saw an opportunity and on March 22 announced a stock offering of up to $3 billion in order to invest more in streaming.
Shares started falling almost immediately, and before long, some analysts were reconsidering their previous bullishness. Michael Nathanson of MoffetNathanson downgraded ViacomCBS to “sell” on March 25 — after the shares had already fallen 30% — arguing that the company might alienate its traditional cable partners if it shifts too many movies and TV shows to Paramount+.
Also potentially stoking the fire: Major banks had reportedly bought a stake in ViacomCBS on behalf of a little known hedge fund, Archegos Capital Management, then sold off their stakes after the offering announcement.
ViacomCBS shares fell 52% between March 22 and March 26. They’re now trading at $44.