Viacom Stock Continues to Slide After Company’s Q3 Earnings Report

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After ViacomCBS (NASDAQ:VIAC) stock slumped a further 10% over the last month, is there any hope left for VIAC stock?

A ViacomCBS (VIAC, VIACA) out front of a corporate building in Times Square.

Source: Jer123 / Shutterstock.com

Looking at the shares today, they have basically done a roundtrip this year, closing at $36.60 per share on the first trading day in January and trading at just over $34 today.

In between, the stock ran up 180% in the first quarter, cresting at $101.97 in mid-March before sliding, in the ensuing eight months,. all the way back to where it began the year.

The situation has to be disheartening for shareholders of the New York-based entertainment conglomerate, especially since it does not appear that the stock has found a bottom yet. Is an eventual turnaround likely or will the company’s losses continue to mount?

Decent Earnings

ViacomCBS recently reported decent if unspectacular Q3 results. The company’s Q3 revenue came in at $538 million, while its earnings per share (EPS), excluding certain items, amounted to $0.76. The results basically met Wall Street’s average expectations.

The mean estimate of analysts was for EPS of exactly 76 cents. The quarterly results initially sent VIAC stock up 1.2%, but the gain was short-lived, and the shares quickly reversed. They have been trending lower over the past few weeks.

ViacomCBS, which owns the CBS broadcast network, the Showtime premium cable network, and cable channels such as Nickelodeon, MTV and Comedy Central, said it got a lift in Q3 from its streaming platforms, with 4.3 million subscribers added to its Paramount+ service during the quarter. That lifted the company’s total subscriber base to nearly 47 million.

However, as with other streaming services such as Walt Disney Co.’s (NYSE:DIS) Disney+, subscription growth is slowing coming out of the pandemic. In Q2, ViacomCBS added 6.5 million subscribers to its streaming platforms. In the end, however, the latest financial results did nothing to help VIAC stock.

New Deals

In addition to expanding its streaming offerings, ViacomCBS has  been making a number of notable deals in recent months. The company has formed a partnership with social media giant Twitter (NYSE:TWTR). Under the deal, ViacomCBS will provide Twitter with content from its hit TV shows, iconic franchises, and live broadcasts.

Twitter plans to add ViacomCBS’s content to its premium subscription service called “Twitter Amplify.” Twitter and ViacomCBS teamed up to livestream on the social media platform the red carpet show at this year’s BET Awards in June , as well as the preshow for the MTV Video Music Awards this past September.

Additionally, ViacomCBS has struck a deal with T-Mobile (NASDAQ:TMUS), offering customers of the wireless provider one year of the Paramount+ streaming service at no charge. While the agreement with T-Mobile, which has more than 100 million customers, has the potential to boost ViacomCBS’ streaming count, analysts have criticized the deal as the free subscriptions will not provide a boost to the company’s bottom line.

Going forward, ViacomCBS will have to spend resources trying to convert  T-Mobile’s customers into paying subscribers of the Paramount+ service.

Wait for VIAC Stock to Bottom

Next month  will mark the two-year anniversary of the closing of the merger between Viacom and CBS. It’s fair to say that, at this point, the tie-up has not delivered the promised value to shareholders.

Despite having great brands and content, the reality is that ViacomCBS has been late to the streaming game and continues to play catch-up to market leader Netflix (NASDAQ:NFLX) and a host of other service providers who have accumulated many tens of millions of loyal subscribers. While ViacomCBS is entering into a number of partnerships that have potential, right now those deals are not being monetized in any meaningful way.

With its share price continuing to soften, investors would be best to stay on the sidelines for now; VIAC stock is not a buy.

On the date of publication, Joel Baglole held a long position in DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2021/11/viacom-stock-continues-to-slide-after-companys-q3-earnings-report/.

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