Shares of media company ViacomCBS (PARA -4.96%) fell as much as 40% on Friday after being downgraded by an analyst. At 2:40 p.m. EDT, shares were still down 33.1% and heading for a very poor end to the week.
Wells Fargo analyst Steven Cahall was the one driving the drop today, lowering his rating on ViacomCBS stock to underweight and lowering the price target from $82 to $59 per share. That one-year price target is well below the $66.35 per share that the stock ended at yesterday.
The stock fell earlier this week in part on a plan to spend billions on content for Paramount+. Investors are starting to contemplate how much the company should be worth as it spends money to build a streaming business and yet falls behind rivals in the number of subscribers it has. Right now, the risk seems to outweigh the reward.
Shares of ViacomCBS shot higher early in the year on the hope that streaming would remake the business. But shares may have gotten ahead of themselves, and Paramount+ has a lot to prove before it will be considered one of the streaming powerhouses. As an investor, I'm not betting on the late entrants in streaming who have smaller libraries because I see the leading streaming stocks like Disney and Netflix as too big to knock off. For now, that's the view the market has of ViacomCBS as well.