Shares of ViacomCBS and Discovery continued their dramatic plunge Friday, every closing down greater than 27%.
That is led to ViacomCBS shedding greater than 50% for the week, whereas Discovery has dipped about 45%.
ViacomCBS shares started to fall earlier this week after the corporate introduced it will elevate $3 billion from new inventory choices. It was additionally downgraded to underweight from equal weight by Wells Fargo, which additionally downgraded Discovery from chubby to equal weight.
ViacomCBS and Discovery have been closely shorted firms, as buyers 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 Leisure (not AMC Networks) led cautious buyers to cowl bets on ViacomCBS, Discovery and AMC Networks, as CNBC beforehand reported.
“What’s modified is [ViacomCBS] went from a internet quick place the place there was a squeeze, and never a number of inventory accessible, after which the corporate issued a number of new inventory,” Ariel Investments’ Charles Bobrinskoy stated Wednesday. “That put a change within the dynamic the place there’s not the identical kind of quick squeeze.”
Traders additionally traced the pullback to a sign from ViacomCBS administration that steered the fairness was overpriced.
“We by no means, ever thought we might see Viacom buying and selling near $100 per share,” MoffettNathanson analyst Michael Nathanson stated. “Clearly, neither did ViacomCBS’ administration as they appropriately bought $3 billion value of inventory/converts on the elevated ranges to assist clear up their levered stability sheet and make investments extra in streaming.”
— CNBC’s Alex Sherman contributed to this report.
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