PreMarket Prep Stock Of The Day: ViacomCBS

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

After an extended decline in an issue from lofty level, a catalyst is needed to push it higher once again.

An article in The Wall Street Journal has provided a potential catalyst for ViacomCBS Inc. VIAB, which is Thursday's PreMarket Prep Stock Of The Day.

ViacomCBS Rebounds Off March 2020 Low: After ending 2019 at $41.97, ViacomCBS took a tumble with the broad market during the March 2020 meltdown. It bottomed in March along with the broad market at $10.10 and began to rebound.

That low came in just above its September low of $9.74. It still ended the year ($37.26) in the red by 11% but added 268% from its March low.

Archegos Hedge Fund And The ViacomCBS Rally: While some explosive rallies in the markets can be explained by fundamentals, others cannot, and ViacomCBS is one of them.

In the early months of 2021 Archegos Hedge Fund was afforded a reckless margin requirement by a few of Wall Street's biggest firms, driving up the price of ViacomCBS and other issues.

When the price turned around in ViacomCBS, those firms exited the stakes as quickly as possible.,

The Dreaded ViacomCBS Stock Offering: It took 2 1/2 months for the issue to climb from its year-end close ($37.26) to peak at $101.97 on March 15, 2021. The issue had a brief two-day retreat to $86.17 and returned to triple digits for the last time on March 22, when it peaked at $100.42 and posted its all-time closing high of $100.34.

On Tuesday, March 23, the company announced a stock offering of $3 billion of equity securities help fund investments in its streaming service Paramount+, which launched in March. The company priced 20 million shares of its Class B common stock at $85 per share on March 24.

The uncertainty over the offering obviously enticed some investors to exit the issue. On that Tuesday, the issue retreated from $100.34 to $91.25 — a level it may never reach again.

Guess The March 24 ViacomCBS High: An offering price often provides a floor or a ceiling for an issue. It can be a floor when investors outside the offering decide they want to get in at the same place as the big boys.

It can act as ceiling when investors in the offering want out immediately and/or others decide that if the company is selling, they want to sell as well.

ViacomCBS Investors Rush To The Exit: The triple effect of investors who stuck with the offering, others looking to lock-in profits and the firms liquidating the Archegos Capital stake created a massive crescendo of selling.

Within eight trading sessions, the issue was over cut in half from its all-time high, ending the April 5 session at $42.90.

Consolidation Station: Since April 8, the issue has been in a trading range from $37.33-$44.26, with a majority of the price action between $39 and $42.

ViacomCBS Price Action Off Rumor: The issue caught a bid late in thd day on Wednesday and ended the session higher by $1.06 at $41.94.

It has added to those gains in Thursday’s session and is trading higher by 2.63% at $42.94 at last check. 

The stock has yet to breach the top of the recent trading, as the high for the sessions stands at $43.23. 

The discussion on ViacomCBS from Wednesday’s show can be found here:

Photo: courtesy of ViacomCBS.