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VIAC Stock Alert: Should You Buy ViacomCBS Amid Plunge, Paramount Global Rebrand?

Shares of ViacomCBS (NASDAQ:VIAC) are in freefall this morning after reporting earnings. The media and entertainment giant reported revenue of $8 billion, up 16% year-over-year. Furthermore, the company added a record 9.4 million global strea…

Shares of ViacomCBS (NASDAQ:VIAC) are in freefall this morning after reporting earnings. The media and entertainment giant reported revenue of $8 billion, up 16% year-over-year. Furthermore, the company added a record 9.4 million global streaming subscribers, primarily driven by Paramount+. However, the company shocked investors when it made a surprise announcement that it would be changing its name and stock ticker. Effective today, ViacomCBS will rebrand to Paramount Global. The corresponding ticker for VIAC stock will change to PARA for Class B common stock. For Class A common stock, the ticker will change to PARAA.

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VIAC Stock: ViacomCBS Reports Earnings, Rebrands as Paramount Global

With shares of VIAC stock down more than 20%, investors are concerned about the earnings report. A major worry is that the company reported that it would spend more than $6 billion by 2024 on direct-to-consumer content. ViacomCBS previously reported that it would spend $5 billion throughout 2024, and an increase in expenses would hurt the top and bottom lines. Fortunately, ViacomCBS is currently profitable, reporting earnings per share (EPS) of 26 cents during Q4. In addition, the company expects to have 100 million streaming subscribers by 2024, up from the previous forecast of 70 million subscribers.

In a memo addressed to shareholders, the company explained the name change:

“It has been one year since the spectacular launch of Paramount+ and two years since the successful merger of Viacom and CBS. In that time, we have shown the world what we knew from the start: that together, aligned around a shared vision and shared strategy, we create a whole that is far greater than the sum of its parts.”

Should You Buy ViacomCBS?

Investors are wondering whether the large price decline presents a buying opportunity. After the media company released its earnings, VIAC stock received a slew of downgrades from several firms. However, it should be noted that a majority of the lowered price targets are still generously above the current stock price.

Bank of America analyst Jessica Ehrlich lowered her price target from $52 to $39. Ehrlich’s bull thesis centered around the media company getting acquired. However, the analyst believes this is now off the table due to Viacom’s “streaming aspirations.” In addition, the analyst believes that “near-term headwinds” will likely result in the company’s operating income to decline this year and the following year. These headwinds include the “NFL cost step up and lack of political advertising.”

In addition, several other firms lowered their price targets as a result of Q4 earnings. These include:

  • Goldman Sachs: Price target lowered from $65 to $53.
  • Guggenheim: Price target lowered from $53 to $40.
  • Credit Suisse: Price target lowered from $42 to $38.
  • Loop Capital: Price target lowered from $45 to $35.
  • On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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