That shift issues as a result of ViacomCBS has been hit onerous by an total decline in cable viewership. The company’s pretax earnings have fallen practically 17 % from two years in the past, and its debt has topped more than $21 billion.
But the stock rose a lot that Robert M. Bakish, ViacomCBS’s chief government, determined to benefit from the boon by providing new shares to lift as a lot as $3 billion. The underwriters who managed the sale priced the providing at round $85 per share earlier this week, a low cost to the place it had been buying and selling on Monday.
You may say it backfired. When a company points new stock, it usually dilutes the value of present shareholders, so some drop in worth is predicted. But a few days after the providing, one in every of Wall Street’s most influential analysis corporations, MoffettNathanson, revealed a report that questioned the company’s value and downgraded the stock to a “sell.” The stock ought to actually solely be price $55, MoffettNathanson mentioned. That began the nosedive.
“We never, ever thought we would see Viacom trading close to $100 per share,” learn the report, which was written by Michael Nathanson, a co-founder of the agency. “Obviously, neither did ViacomCBS’s management,” it continued, citing the brand new stock providing.
Streaming remains to be a money-losing enterprise, and which means the outdated line media corporations should nonetheless endure more losses over more years earlier than they’ll return to profitability.