ViacomCBS shares decline as investors cast doubt on streaming performance

Shares of ViacomCBS continued to decline on Wednesday, trading down more than 20%, as investors continued to react to a new sale of shares and questioned the media company’s ability to successfully execute its streaming strategy.

The decline comes behind the decline in shares on Tuesday, when shares closed 9%. Shares began to fall this week after the company announced it would raise $ 3 billion from new stock offerings.

In a note Wednesday, Bank of America Securities analysts said moving to ViacomCBS was “the right strategy” for the media company, “but difficult to execute.”

The company launched its Paramount + streaming service earlier this month. Media companies have poured funds into new content as the field becomes more crowded, and new funds from the sale of shares could help Paramount + from colleagues. But analysts have warned that it will be difficult to compete with “large-scale streaming players” such as Netflix and Disney +.

In a note Tuesday, AB Bernstein analysts wrote that they support secondary growth, saying it could provide a pillow against a drop in advertising revenue or a way to invest more money in streaming. But analysts reiterated that the stock was “significantly cost-effective” and warned that the company’s inherited business “insurmountable structural winds” and could “waste billions of cash flows, which we believe will struggle to bear.” own weight ”.

ViacomCBS was not the only new entrant to suffer a fall on Wednesday. Discovery shares fell by up to 10% after UBS downgraded the stock to sell. Analysts wrote that his birth scouting service “starts from a better position than its peers”, with a stronger international presence and fewer old license offers, which means a lower risk of cannibalizing existing revenues as switch to streaming).

But the UBS note also warned that “we remain concerned about the final scalability of the service in relation to the decline in the linear business”.