ViacomCBS, Discovery both fall 27%, leading media stock selloff
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[March 27, 2021] By
Sinéad Carew
(Reuters) - Shares in media companies
ViacomCBS and Discovery Inc 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.
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%.
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ViacomCBS headquarters is pictured in New York, New York, U.S.
December 5, 2019. REUTERS/Kate Munsch
"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 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)
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