Shares in Paramount Global soared on Wednesday after details of an $11 billion acquisition proposal by the private equity firm Apollo became public. Paramount stock closed at $12.51 per share Wednesday, up nearly 12 percent for the day.
The tech firm faces increasing competition on the streaming advertising side, as Netflix and Disney grow ad tiers and Pluto and Tubi offer free services, and may get a new rival on the smart TV-manufacturer front.
The announcement that ESPN, Fox and Warner Bros Discovery were forming a new sports streaming venture sent shares of sports-oriented Fubo spiraling downward. Fubo stock was down 25% to $1.88 a share in Wednesday morning trading.
Shares in the studio jumped by over 13% on Wall Street chatter around Skydance Media and RedBird Capital possibly courting a deal with controlling shareholder Shari Redstone.
Exclusives
Year-over-year reading of legacy-based media companies’ stock prices shows continued declines, while CTV-focused digital media are generally posting higher, more favorable results for investors. Paramount Global, Walt Disney and AMC Networks are just a few among the legacy media companies — those with significant live TV over-the-air business — that have seen steep stock-market declines.
“Patience is a virtue,” highlights one Wall Street expert as observers discuss lower-than-expected revenue trends, while others lament “mixed” results, and one speaks of “a mother of a quarter.”
Shares of Netflix jumped more than 10% Thursday on news that the streamer had signed up almost 5 million customers for its ad-supported plan within six months of launch. At Netflix’s first-ever upfronts event Wednesday — held virtually — the company announced that it had signed up nearly 5 million global monthly active users following its initial introduction in early November 2022.
Shares of Disney slipped as much as 9% in trading Thursday after the media conglomerate reported earnings for the first three months of 2023. Disney’s earnings report showed progress on the cost-cutting front — with streaming losses narrowing for the quarter — but analysts cited a weak advertising outlook and uncertainty over when its streaming business can contribute to the bottom line.
Netflix stock was on the rise more than 6% Thursday morning, following a double upgrade from “Sell” to “Buy” courtesy of analyst firm CFRA, which shifted its target price for the stock from $225 to $310 per share.
Many media stocks that had been heavily impacted since the beginning of the year witnessed sharply higher pricing on Wednesday following Tuesday’s positive results for Netflix’s recent quarter. Netflix media stocks rose 7.3% on Wednesday to $216.44 at the close of trading.
Shares of the social media company have lost a third of their value since April 25, when Musk’s offer to buy the company was accepted by the company’s board.
Shares of ViacomCBS are down more than 20% in early trading as Wall Street digests the company’s streaming strategy, outlook and financials announced after the market closed Tuesday, and clearly has some issues. MoffettNathanson said: “Despite the big announcement of ViacomCBS changing its name … we are left with a similar question as we had last year: will the company be able to grow EBITDA and FCF again to match prior levels? In short, unfortunately, we still did not learn anything to help us believe the answer will be yes, at least for the foreseeable future.”
Netflix rose handily in after-hours trading Wednesday following news that Bill Ackman’s Pershing Square Capital has acquired more than 3.1 million shares to become a top-20 stockholder.
Discovery shares, which have been in a funk for months, roared back to life Friday, jumping 17% on heavy trading volume after a validation from a veteran Wall Street analyst. Bank of America’s Jessica Reif Ehrlich upgraded Discovery shares to a “buy” from “neutral” and rhapsodized about its potential in a note to clients. She also raised her 12-month price target to $45 from $34. The stock responded by climbing to $30.06 by the closing bell, its highest level since last July. Trading volume was nearly seven times normal levels.
Walt Disney stock has been the worst performer in the Dow Jones Industrial Average this year. While the company’s grander streaming ambitions hit a few snags, a trove of new content could propel shares in 2022.
Comcast stock fell Tuesday after its chief financial officer signaled a third-quarter slowdown in broadband subscriber growth, which had been a bright spot during the shift to work-from-home amid the coronavirus pandemic.
ViacomCBS stock dropped nearly 9.1% Tuesday, as investors exited positions on news that the media conglomerate will sell up to $3.45 billion in stock as part of funding streaming content. The company’s shares closed at $91.25 apiece, coming a day after ViacomCBS’ announcement of plans to raise $3 billion in a stock offering.
Everyone is a winner in the streaming wars. Legacy media companies like ViacomCBS and Discovery have been rewarded by investors for their push into streaming, while Disney’s stock is being saved by Disney+’s breakout success. Since the beginning of 2020, both ViacomCBS and Discovery’s stock have skyrocketed by more than 130% each, and Disney and Comcast have also risen by 36% and 27%, respectively, in that same timeframe.
Disney and ViacomCBS shares were buoyant in trading Monday thanks to good news that allowed ViacomCBS to buck the general downtrend for the Nasdaq index.
Twitter shares plunged by more than 10% Monday in early morning trading following the social media giant’s move to ban President Trump, reflecting fears of political retribution and financial fallout stemming from the company’s decision.
After markets opened Wednesday, Netflix’s stock increased about 3.5% to $427.77 per share, topping its previous high of $423.21 per share, set during midday trading in June 2018. If the gains hold through the end of Wednesday, Netflix will also top its previous all-time high closing price of nearly $419 per share, set in July 2018.
Sinclair Broadcast Group stock hit the stratosphere on Monday — bucking the day’s downward trend on Wall Street to gain nearly 35% to an all-time high of $60.48 — as the company’s CEO touted the company’s deal to acquire the former Fox regional sports networks.
Shares in The Walt Disney Co. hit $129.85 at the opening bell Friday, up 13%, following Thursday’s news of details on its new streaming service Disney Plus.
Sony Corp. shares climbed more than 9% on Tuesday after a Reuters report saying Third Point LLC was again raising its stake in the Japanese conglomerate stoked speculation that fund owner Daniel Loeb was preparing to agitate for more change.
Investors Put Their Chips On Television
Seven publicly traded station groups have registered double-digit gains year to date, and on a year-over-year basis, three stock prices have gained more than 50% — those of Scripps, Gray and Nexstar. The groups also blew the doors off of two major indices, generally outperforming both the Dow and S&P by wide margins. Kyle Evans, managing director of the technology/media practice at the Stephens Inc. financial services firm, breaks things down.
Disney shares slipped Tuesday as investors coped with newfound uncertainty about the entertainment giant’s leadership, after the unexpected resignation on Monday of the company’s No. 2 executive and heir apparent to CEO Bob Iger. Shares were down 2.3% at $96.40 midday Tuesday, the first trading day after Disney said Thomas Staggs would depart next month after 14 months as COO and likely successor to Iger, whose contract runs through June 2018.
Analysts at MoffettNathanson have reduced their target price for Netflix by $13 per share, from $98 to $85. The firm still has the stock labeled “Neutral.” Netflix stock is down 22% year-to-date in 2016, which is the opposite of its prior-year positive trajectory.
Pure Plays Improve, But Wall St. Skeptical
While analysts are encouraged by TV groups’ addition of retrans as a revenue stream, their strong political revenue and a return of the deal market, “there is a certain part of Wall Street that is very skeptical that television has good fundamentals today,” says longtime analyst Bishop Cheen.
RBC Capital Markets analyst David Bank makes a gutsy call this morning by designating CBS his “top pick” stock. Shares are already trading high: CBS closed yesterday at $31.33, right around its 52-week peak and close to its top price in pre-recession 2007. Yet Bank says he expects CBS to hit $38.
