Satori Fund founder and portfolio manager Dan Niles contended that ViacomCBS Inc., which currently trades at 8x CY22 PE, is “incredibly cheap compared to streaming leaders” Netflix Inc. and Roku Inc.
These streaming leaders are growing their streaming revenues slower than VIAC yet fetch much higher multiples.
In addition to VIAC’s asymmetric growth versus valuation profile, VIAC’s $1.1 billion in streaming revenues grew to 16 percent of overall company revenues in their September quarter.
NFLX is trading at 10x trailing sales. VIAC should do close to $5 billion in streaming revenues this year, so $50 billion is a reasonable valuation for this business alone.
However, VIAC has a market cap of only $21 billion with ~$10 billion of net debt, assuming current announced deals close.
Niles admitted his mistake and cut position in VIAC to take a tax loss for 2021, upcoming Q4 results, and the outlook for streaming losses hopefully set a bottom for the stock and set the name up for a good rest of 2022.
Investors may want to go to the sidelines until guidance on Q4 results or sentiment reverses for the company.
Today VIAC is viewed as a melting media ice cube and a streaming loser.
Niles sees VIAC slowly becoming recognized as a contender against NFLX and The Walt Disney Co. in the streaming wars.
