ViacomCBS, Discovery both fall 27%, leading media stock selloff

Paramount Global

26/03/2021 22:32

By Sinéad Carew
    March 26 (Reuters) - Shares in media companies ViacomCBS
 VIAC.O  and Discovery Inc  DISCA.O  tumbled around 27% each on
Friday, capping a week of declines and putting both stocks
roughly 50% below their recent record highs.
    ViacomCBS closed down $18.12 at $48.23, marking a record
one-day percentage decline, with trading volume more than five
times its 10-day moving average. The stock had hit a record high
of $101.97 on March 15 before it started losing ground over
several sessions. 
    Discovery shares dropped $15.85 to $41.90 in what was also
its biggest one-day percentage decline, with volume surpassing
eight times its 10-day moving average. That stock has now fallen
45.8% over five straight sessions of declines after hitting a
record high of $78.14 on March 19.    
    Wells Fargo on Friday downgraded Viacom to "underweight"
from "equal weight" and slashed its price target for the stock
from $82 to $59, citing a $2.7 billion equity sale by the
company earlier in the week.  urn:newsml:reuters.com:*:nL1N2LO27S
    Both stocks had soared this year on increased appetite for
undervalued names, newly launched streaming services and an
unwinding of bearish investor bets. Viacom was still showing a
29% year-to-date gain compared with Discovery's 39%. At their
2021 peaks Discovery was up about 160% year-to-date while
ViacomCBS had risen as much as 174%. 
    "Maybe reality is setting in," said Eric Handler at MKM
Partners, who covers Discovery. 
    Large blocks of shares in both companies were put in the
market on Friday, likely exacerbating the declines, Handler
said. 
    Chris Marangi, co-chief investment officer for value at
Gabelli Funds, which was Viacom's second biggest holder of
voting stock as of late January, also cited the outsize trades
as a factor in the stocks' sharp fall. 
    "It's a massive amount of volume. That's the reason" for
Friday's decline, said Marangi. 
   Also on Friday Fox Corp  FOXA.O  shares fell 6.2% to $37.80
while News Corp fell 1.9% to $25.72.

 (Reporting By Sinéad Carew; Editing by Ira Iosebashvili and
Aurora Ellis)
 ((sinead.carew@thomsonreuters.com; +1 (646) 223 6186; Reuters
Messaging: sinead.carew.thomsonreuters.com@reuters.net))