Analyst Note| Neil Macker, CFA |
ViacomCBS capped a tumultuous week with a 25%-plus share price decline on March 26, resulting in a five-day drop of more than 50%. The decline was sparked by the March 22 announcement of an equity raise in the form of Class B common shares and mandatory convertible preferred shares. The offering priced on March 24 for total proceeds of roughly $2.6 billion to the firm in exchange for a total number of shares equal to about 5% of those currently outstanding. The instant arrival of 20 million new shares appears to have sparked an investor sell-off as the likelihood of a short squeeze has decreased. We applaud management’s foresight to raise capital by selling at what we viewed as inflated prices. We are maintaining our narrow moat rating and $57 fair value estimate.