Shares were down 3% to $68.06 on Thursday, after sliding 23% on Wednesday.
MoffettNathanson analyst Michael Nathanson downgraded ViacomCBS to sell from neutral and slashed his price target to $55 from $77.
The company is offering of 20 million shares of Class B common stock at $85 per share, for net proceeds of about $1.67 billion. It is also issuing 5.75% Series A mandatory convertible preferred stock for net proceeds of about $983 million.
Nathanson said that the domestic average revenue per user growth for media companies like ViacomCBS will be challenging as they are giving up higher linear per subscriber revenues for lower-monetized direct-to-consumer products.
Viacom is "without a clear positive pivot in either the U.S. or international," the analyst said.
Nathanson sees a "tough economic trade" of shifting linear revenue to direct-to-consumer, even before factoring in a likely lower margin profile.
ViacomCBS has been emphasizing its new Paramount+ streaming service and its Pluto streaming offerings. The company said it plans to use proceeds of the offerings for “general corporate purposes, including investments in streaming.”
ViacomCBS will pay an estimated $2 billion for the next NFL broadcast package that was finalized last week.
Originally launched as CBS All Access in October 2014, the service was rebranded as Paramount+ earlier this month following the merger of CBS and Viacom in 2019.
Last month, the company swung to a stronger-than-expected fourth-quarter profit from a year-earlier loss on 3.3% higher revenue.