VIAC Stock is a solid streaming game that lurks in plain sight
It’s been six months since the explosion of Archegos Capital sank ViacomCBS (NASDAQ:VIAC) stock like a stone. However, the media conglomerate’s results show the company is anything but on the ropes. Yet investors continue to price VIAC shares as they are. Why? The perception that its streaming efforts are “too little, too late”.
Specifically, some see the millions that ViacomCBS is investing in new content for Paramount + and PlutoTV as next to nothing. Skeptics believe the streaming business will fail to replace declining profits from its “old media” broadcast and cable assets. Or worse, that its streaming services will not be enough to compete against the competition at all.
However, this negative perception can represent an opportunity for investors against the grain. Ultimately, ViacomCBS is very inexpensive. It trades at a futures price / earnings (P / E) ratio of 9.94 times. If this can prove the skeptics wrong, the VIAC share will experience a significant reassessment.
With high possible upside risk and low downside risk, the verdict here is obvious: Buying VIAC now is worth doing.
VIAC Stock deserves more credit for its streaming catalyst
Currently, investors have limited hope that ViacomCBS will deliver on its streaming promises. However, before heading out with the crowd, take a look at the details. It is clear that this business – perceived as an “old medium” that risks declining in the long term – still has a chance to thrive in a changing media landscape.
First, the most recent figures from VIAC have shown that its continued growth is buzzing. Growth in streaming subscribers in the quarter ending June 30 was well above estimates. The company added 6.5 million streaming subscribers in the second quarter.
Second, the company is just beginning to adapt to changes in the industry. As noted by CEO Bob Bakish, ViacomCBS continues this transformation from an “extremely strong capital position”.
Rich with cash from asset sales and a capital raise, the company has what it needs in the war chest to take on its rivals in the US and continue streaming overseas expansion. . The actions she is currently taking may start to be reflected in results in 2022.
Once that happens, expect this single-digit P / E title to reach a review it deserves. A move to a P / E of 15 to 20 times (still reasonable compared to other media stocks) would mean a big price increase. Right now, VIAC stock is trading at around $ 39 per share.
Other factors could limit the disadvantages
The already low valuation may be enough for some investors to feel secure in buying VIAC shares now. But there are other factors at play that could provide downside protection even as the stock market continues to experience turbulence.
On the one hand, it’s not just the streaming performance that could be further improved. As I said before about VIAC, the post-pandemic return of its Paramount Pictures unit could lead to better results in the quarters to come. The box office numbers for its recent film releases, such as Paw Patrol: The Movie, indicate this.
Additionally, investors should view the company’s status as a target for takeover. Admittedly, the takeover talk has not gone beyond the rumor stage. Still, the chances of ViacomCBS being taken over in a merger deal remain high. Potential buyers could be rival media conglomerates or large tech companies looking to expand their content offering.
This does not mean that there is no risk here. A major setback or misstep with the company’s big bet on streaming would likely put pressure on stocks. However, when we compare the potential gains to the potential losses? The setup seems to be in your favor here.
Profit and buy VIAC shares
Negative perceptions regarding this company’s streaming prospects continue to keep VIAC shares trading at a bargain price. Of course, this low valuation in itself does not make it a “must see” opportunity. There is a risk that ViacomCBS will turn into a value trap. However, the ultimate success of the business is much more important.
If positive results come in and investors appreciate the transformation again, this stock could move well above current prices. And at the same time, there is still a lot of evidence indicating a low downside risk.
Arrive with a “B” grade in Portfolio filing cabinet, VIAC action is a great streaming game that the market has ignored. Consider making a purchase before the crowd notices.
As of the publication date, neither Louis Navellier nor the InvestorPlace research staff member primarily responsible for this article held (directly or indirectly) positions in the securities mentioned in this article.
Louis Navellier, who has been called “one of the most important fund managers of our time”, broke the silence by this shocking ‘say it all’ video… Exposing one of the most shocking events in our country’s history… and the only move every American has to make today.