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ViacomCBS Stock Dives, Offerings Fall Short

What’s behind the slide?
(DCStockPhotography)
(DCStockPhotography)
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ViacomCBS’ stock saw a significant drop Wednesday, ending a multi-month rally that had prices surging, The Information reports.

Why It Matters: Well, for the longest time, traditional entertainment companies could do no wrong as they crafted the perception of being forward-thinking by transitioning into the streaming space. Now, it seems all of that “investor love for anything streaming” is dissipating and these stocks are starting to come back down to earth.

Numbers To Consider:

  1. ViacomCBS fell 23% on Wednesday, while Discovery dropped 14%. The stocks had risen around 170% in the last few months.
  2. Viacom also whiffed on plans to “raise as much as $3.4 billion in a stock offering and a convertible preferred stock offering.” Instead, they wound up with a total of $2.7 billion.
  3. The company sold 20 million shares for $85 each, a $15 premium on Wednesday’s closing price.

Looking Ahead: The numbers are a clear indicator that investor demand for this space “wasn’t as strong as the recent stock surge suggested.” As CNBC noted, Wall Street analysts “had issued notes of warning about the streaming strategies in the past day or so, likely contributing to the sell-off and weaker than expected demand for the offerings.”

  • Perhaps once the dust settles, streaming will cede all of its dominance to major platforms like HBO Max, Disney+ and Netflix as opposed to the “rising tide lifts all boats” mentality.
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