ViacomCBS (VIAC) earned generally positive reviews on Wall Street after the reveal of its upcoming Paramount+ service and the company's hybrid approach to the streaming video market. But VIAC stock seesawed on Thursday.
XThe New York City-based media company detailed its Paramount+ service, which launches March 4, at an investor event late Wednesday. Paramount+ is a rebranding and revamp of its current CBS All Access service. It will join the company's Pluto TV, BET+ and Showtime services to cover the streaming market with free, pay and premium offerings.
On the stock market today, VIAC stock dropped 4.7% to 62.50, during an overall rough session for stocks. Earlier in the day, VIAC stock climbed as much as 3.4% to 67.85. That was its highest level since July 2017.
Paramount+ will include live sports, breaking news and "a mountain of entertainment," ViacomCBS Chairman Shari Redstone said during the event. It will feature original shows and movies as well as a library of more than 30,000 episodes and 2,500 movie titles from its studios, such as CBS, Comedy Central, MTV, Nickelodeon, Paramount Pictures and the Smithsonian Channel.
Paramount+ Leans On 'Star Trek,' Other Franchises
Over 50 exclusive original series across scripted dramas, kids and family, reality, comedy, music, sports, news and documentaries are set to premiere on the service in the next two years, including 36 arriving in 2021. Series include spinoffs of "Star Trek," "Grease," "Flashdance" and "SpongeBob SquarePants" and revivals of "Frasier" and "Criminal Minds."
Also, big-screen movies will have their streaming debut on Paramount+ immediately following a theatrical release window of 30 to 45 days. Those movies include "A Quiet Place Part 2," "Mission: Impossible 7" and "Top Gun: Maverick."
Paramount+ will have two pricing tiers in the U.S. An ad-supported tier will cost $4.99 a month and a premium tier with commercial-free viewing will cost $9.99 a month.
VIAC Stock Gets Re-Rated In Streaming Market
Investors are starting to re-rate VIAC stock after treating it as a value stock, Redstone said. "The market is beginning to recognize the value of the company," she said. "ViacomCBS is one of the kings of content."
Chief Executive Bob Bakish said Viacom is switching from making hit shows for third-party streaming services to focusing on its own services.
"Every major streaming service has had a monster hit from one of our studios," he said. For instance, ViacomCBS made "13 Reasons Why," "Dead to Me," "Emily in Paris" and "The Haunting of Bly Manor" for Netflix (NFLX). It also made "Jack Ryan" for Amazon (AMZN) Prime Video.
"We know how to make hits," Bakish said. "ViacomCBS has been and remains a consistent hitmaker."
Paramount+ will join a crowded market. In addition to Netflix and Amazon Prime Video, major streaming video services include Walt Disney's (DIS) Disney+ and Hulu, Apple's (AAPL) Apple TV+, AT&T's (T) HBO Max and Comcast's (CMCSA) Peacock.
Price-Target Hikes For VIAC Stock
Needham analyst Laura Martin on Thursday recommended investors sell Netflix stock to buy ViacomCBS stock.
She reiterated her buy rating on VIAC stock and raised her price target to 80 from 55. She rates Netflix stock as underperform.
"We calculate that VIAC's streaming assets are worth more than VIAC's total market cap today," she said in a note to clients.
Guggenheim analyst Michael Morris maintained his buy rating on VIAC stock and upped his price target to 74 from 50.
"The company is targeting 65 million to 75 million global streaming subscribers and $7 billion of streaming revenue by 2024, vs. 30 million (subscribers) and $2.5 billion in 2020," Morris said in a note to clients. "We see the company as well positioned among peers."
ViacomCBS Reports 30 Million Paid Streaming Subscribers
Other analysts were more cautious, taking a wait-and-see approach to the company's streaming strategy.
"ViacomCBS has a unique strategy in streaming, across free, pay and premium and incorporating live and on-demand, TV and film, scripted and reality," Morgan Stanley analyst Benjamin Swinburne said in a report. It now needs to prove that it can execute on its strategy, he said.
Swinburne rates VIAC stock as equal-weight, or neutral, with a price target of 55.
Before its Paramount+ event, ViacomCBS reported fourth-quarter earnings that beat expectations. It earned an adjusted $1.04 a share, up 13% year over year, on sales of $6.87 billion, up 3%.
It ended 2020 with nearly 30 million paying subscribers for its streaming services, including CBS All Access and Showtime. Its ad-supported Pluto TV service reached 30.1 million monthly active users in the U.S., up 34% from 2019. Pluto TV also had 13 million international monthly active users.
VIAC stock has been outperforming the broader stock market lately. It has an IBD Relative Strength Rating of 94 out of 99, according to the IBD Stock Checkup tool.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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