ViacomCBS Stock Loses More Than Half Its Value In A Week – Will The Tide Turn?

by Trefis Team
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ViacomCBS stock (NASDAQ: VIAC) has plunged in the last one week, with the company losing almost half its market value in the last five days, completely underperforming the S&P500 which gained more than 1% during this time. VIAC stock currently trades at $47. The stock had crossed the $100 mark on 22nd March 2021 and has lost more than 50% of its value since then.  The market had been over enthusiastic about the stock since the beginning of 2021 due to its effort of transforming to a streaming giant from a traditional cable media company. However, this enthusiasm was short-lived. The management decided to take advantage of the boom in the stock price by offering additional shares to raise close to $3 billion. This issue was priced at $85 per share, which was a 15% discount to where the stock had been trading on 22nd March. Along with the fact that the new issue would dilute the existing shareholders’ value, commentary from influential Wall Street research firms that the company’s management itself does not think that the recent rally of the stock to $100 is justified, led to a sharp reversal in fortune. This led to the stock tanking 50%. Additionally, the equity swap fiasco at Archegos Capital Management led to the hedge fund selling 30 million shares of VIAC stock in an apparent move to liquidate the fund, thus exacerbating the fall in the stock price.

However, is VIAC stock set to continue its downward trajectory or could we expect some recovery? We believe that there is a strong chance of a rise in VIAC stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on VIAC Stock Chances Of Rise for more details.

Five Days: VIAC -49%, vs. S&P500 1.4%; Underperformed market

(Extremely rare event)

  • ViacomCBS stock declined 49% over a five-day trading period ending 3/30/2021, compared to a broader market (S&P500) rise of 1.4%
  • A change of -49% or more over five trading days is an extremely rare event, which has occurred 3 times out of 2516 in the last ten years

Ten Days: VIAC -52%, vs. S&P500 0.09%; Underperformed market

(1% likelihood event)

  • ViacomCBS stock declined 52% over the last ten trading days (two weeks), compared to a broader market (S&P500) rise of 0.09%
  • A change of -52% or more over ten trading days is a 1% likelihood event, which has occurred 25 times out of 2500 in the last ten years

Twenty-One Days: VIAC -31%, vs. S&P500 1.6%; Underperformed market

(7% likelihood event)

  • ViacomCBS stock declined 31% the last 21 trading days (one month), compared to a broader market (S&P500) rise of 1.6%
  • A change of -31% or more over 21 trading days is a 7% likelihood event, which has occurred 165 times out of 2458 in the last ten years

Out of three instances in the last ten years that ViacomCBS (VIAC) stock saw a five-day decline of 49% or more, none of them resulted in VIAC stock declining over the subsequent one-month period (21 trading days). As a similar change has occurred very few times historically, we can’t directly use historical trends to draw a conclusion. However, keeping in mind the fact that the stock has seen an unusually sharp drop in price over the last five days, we believe that the trend will likely reverse over the coming month, especially helped by the company’s focus on growing its streaming business – Paramount+. The service tapped ViacomCBS’s vast archive of content from the CBS broadcast network, Paramount Film Studios, and several cable channels, including Nickelodeon and MTV.

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