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Shares in ViacomCBS kept sliding after the studio priced a $3 billion stock sale to fund its Paramount+ launch.
ViacomCBS stock was trading at $49.40 on the NASDAQ Exchange, down 17.47, or just over 26 percent, on Friday afternoon. Investors unloaded shares in the studio after ViacomCBS raised fresh cash to bolster its push into streaming by pricing $2 billion in Class B common stock and $1 billion in Series A Mandatory Convertible Preferred Stock at $85 per-share on March 24.
Stock in ViacomCBS began the week at $99.47 after the studio first unveiled plans for the $3 billion share issue on March 22, but has since tumbled in value by more than 50 percent. ViacomCBS relaunched its CBS All Access streaming service as Paramount+ earlier this month while also unveiling reboots, spinoffs and original series and films in the process.
On Friday, shares in Discovery, which has also launched its own streaming service, Discovery+, tumbled by $14.68, or 25 percent, to $43.33. That followed Wells Fargo analyst Steven Cahall downgrading the shares of ViacomCBS and Discovery on grounds they were due for a pullback after recent surges in value.
“We think the companies are better off than they were in 2020 due to DTC, but there’s too much risk to justify the recent valuations without a technical premium. While we expect valuations to settle higher than prior norms due to the continued threat of quant/momentum/short squeeze, we think normalized valuation levels still represent downside,” Cahall wrote in a March 26 investors note.
Stock in ViacomCBS and Discovery soared in value ahead of the launch of their respective streaming platforms, but there are concerns among institutional investors that both media giants can successfully compete against rival online players like Netflix and Disney with its Disney+ service.
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