Should You Invest in ViacomCBS?

OVERVIEW

ViacomCBS Incorporation is a company based in the United States. The company offers a wide range of entertainment products in markets around the world. The company produces news and sports broadcasts, TV shows, movies, and many other forms of entertainment. The company was founded in 1986.

Why You Should?

  1. ViacomCBS is a great reopening play in an investor’s portfolio. The company saw some headwinds in the production of new movies and shows due to pandemic restrictions around the world. However, once the pandemic is over, the company will continue to produce new content for its audience. This will also benefit investors.
  2. The COVID-19 pandemic benefited the company. As people stayed at home, they continued to watch news and sports broadcasts, TV shows like NCIS, and movies like The Godfather and other Paramount-made films. This will benefit the company and its investors.
  3. ViacomCBS recently announced its direct-to-consumer (DTC) entertainment subscription platform called Paramount+. On this platform, subscribers can watch CBS TV shows and films. As the DTC entertainment platform business continues to strengthen around the world (similar products include Disney+ and Netflix), this will benefit the company and investors.
  4. ViacomCBS is a cheap investment option in an investor’s portfolio. At the moment, the company’s stock price trades under 40 dollars per stock and a current price to earnings (basically a price to profits) ratio of under 10. This ratio is extremely low for a company like CBS and this might show a good time for long-term investors to get into the stock.

Why You Should Not?

  1. The company faces tough competition in the entertainment industry. Some of these competitors include Fox, Disney, Netflix, and many others. This competition might hurt the company and its investors in the future.
  2. Bill Hwang, the founder of Archaegos (an investment firm), continued to purchase ViacomCBS stock and owned 15% of the company at a given time. However, his fund was margin-called (didn’t have enough money to keep operating) and was forced to liquidate (sell) all of its positions. This caused the price of Viacom’s stock from over $100 to $40.
  3. I think that there are better investment options in the entertainment industry. Some of these companies include Netflix and Disney, 2 companies with stronger brand recognition and product portfolio than ViacomCBS. I think that these stocks have a higher rate of return in the future than CBS and might be better investments.

MY OPINION

I think that ViacomCBS is a decent long-term investment option due to its position as a good reopening play, positive impacts from the pandemic, its release of a DTC platform (Paramount+), and its position as a cheap investment option. However, tough competition, the Bill Hwang investment failure, and better investment options might hurt the company and its investors in the future.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.