ViacomCBS, Discovery dive in volatile trade

Paramount Global

26/03/2021 19:16

(Updates. Adds Wells Fargo analyst commentary, Discovery Inc's
statement)
    ** ViacomCBS Inc  VIAC.O  shares last down 30.9% at $45.83
after being halted several times for volatility
    ** Early Fri Wells Fargo downgraded stock to "underweight"
from "equal weight", slashed PT from $82 to $59
    ** Wells analyst Steven Cahall says VIAC's equity raise
marked "beginning of the end of the momentum trade", though says
is was a "savvy" transaction to either bolster balance sheet or
for streaming investments
    ** VIAC early Weds raised $2.7 bln by selling 20 mln shares
at $85 alongside $1 bln convertible preferred offering
    ** Cahill added with stock's valuation still near historical
highs, he expects a derating before VIAC "can be judged on
fundamentals alone"
    ** On Thurs, research firm MoffettNathanson cut its rating
on VIAC to "sell", saying co "appropriately took advantage" of
elevated stock price to raise capital  urn:newsml:reuters.com:*:nL1N2LN2DM
    ** However, analyst Michael Nathanson warned that as more
premium content is shifted to direct-to-consumer (DTC)
platforms, media industry runs risk of both higher cord-cutting
and greater viewer erosion
    ** Shares of peer Discovery Inc  DISCA.O   DISCK.O  are last
down 30.6% at $40.09 on Fri, also after tripping volatility
halts
    ** Discovery in statement on Fri said today's trading
activity is not the result of insider transactions or
transactions by Advance/Newhouse Programming Partnership or its
affiliates  urn:newsml:reuters.com:*:nPn7tTFlPa
    ** VIAC shares have now more than halved WTD, but still up
20% in 2021
    ** DISCA shares down 48% WTD, cutting YTD gain to ~32%

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper.tr.com@reuters.net
lance.tupper@tr.com 1-332-219-1430))