By Dhirendra Tripathi
Investing.com – ViacomCBS shares (NASDAQ:VIAC) fell 10% in Friday’s trade as analysts refused to shrug off concerns surrounding the company’s plans to raise almost $3 billion through a share issue.
Market players fear a sharp dilution of investor equity, reflected in erosion of the share price by more than a quarter since hitting a record last week.
Wells Fargo (NYSE:WFC) has cut ViacomCBS to underweight from equal weight, dropping the price target to $59, its current level after the fall. Research boutique MoffettNathanson cut its Viacom rating Thursday to sell from neutral.
Viacom said it would use some of the proceeds to build its streaming business, which Bank of America (NYSE:BAC) called the right strategy but “hard to execute.”
In a filing Wednesday, ViacomCBS said it expects $1.67 billion from the sale of 20 million Class B common shares, plus nearly $1 billion from a concurrent sale of convertible preferred stock.
The company's streaming service, Paramount+, recently came to market. But streaming is dominated by Netflix (NASDAQ:NFLX), and other giants like Disney (NYSE:DIS) are pouring resources into the space.