Shares of ViacomCBS and Discovery continued their dramatic plunge Friday, down 30% and 31%, respectively.
That’s led to ViacomCBS shedding more than 53% for the week, whereas Discovery has dipped about 49%.
ViacomCBS shares started to fall earlier this week after the corporate introduced it might increase $three billion from new stock choices. It was additionally downgraded to underweight from equal weight by Wells Fargo, which additionally downgraded Discovery from obese to equal weight.
ViacomCBS and Discovery have been closely shorted firms, as traders stay skeptical of the businesses’ long-term prospects within the crowded media panorama. The contagion impact from the current quick squeezes on GameStop and AMC Entertainment (not AMC Networks) led cautious traders to cowl bets on ViacomCBS, Discovery and AMC Networks, as CNBC previously reported.
“What’s modified is [ViacomCBS] went from a internet quick place the place there was a squeeze, and never quite a bit of stock accessible, after which the corporate issued quite a bit of new stock,” Ariel Investments’ Charles Bobrinskoy mentioned Wednesday. “That put a change within the dynamic the place there’s not the identical sort of quick squeeze.”
Investors additionally traced the pullback to a sign from ViacomCBS administration that prompt the fairness was overpriced.
“We by no means, ever thought we might see Viacom buying and selling shut to $100 per share,” MoffettNathanson analyst Michael Nathanson mentioned. “Obviously, neither did ViacomCBS’ administration as they appropriately bought $three billion price of stock/converts on the elevated ranges to assist clear up their levered stability sheet and make investments more in streaming.”
— CNBC’s Alex Sherman contributed to this report.
