(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%.
“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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March 27, 2021 at 05:40AM
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ViacomCBS, Discovery both fall 27%, leading media stock selloff - Reuters
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