(Bloomberg) — A rally in ViacomCBS Inc. and Discovery Inc. that pushed the media companies to the top of the S&P 500 Index this year further unraveled on Friday after another major Wall Street firm said the stocks were overvalued.
ViacomCBS and Discovery posted their biggest declines ever in afternoon trading in New York in the aftermath of a downgrade by Wells Fargo, which joined a chorus of several other firms which have also turned more bearish on the stocks this year.
Adding to the selling pressure, large block trades on both shares were offered via Goldman Sachs and Morgan Stanley, according to a person familiar with the matter.
Read more: ViacomCBS Hit With Surge of Bearish Calls After 169% Stock Rally
ViacomCBS traded at $43.91 and Discovery was at $38.76 at 2:50 p.m. in New York, and down from record highs of $100.34 and $77.27, respectively. The sharp swings triggered volatility halts on both stocks, while trading volume on the shares also jumped.
Discovery said in a statement on Friday that trading activity isn’t a result of insider transactions by Advance/Newhouse Programming Partnership or affiliates. It also reaffirmed its outlook and said it’s pleased with its strategy related to its traditional business.
Sharp Swings
The week started on a high note for the stocks after both closed at records last Friday, capping triple-digit rallies this year on the back of enthusiasm over their streaming initiatives.
That optimism though has soured. Wells Fargo’s analysts on Friday joined Macquarie, Citi and Barclays in arguing that both shares have more than priced in the companies’ streaming potential.
Read more: Paramount+ Enters Streaming Race With ‘Frasier,’ ‘SpongeBob’ (2)
With the recent slump, “it seems the momentum has come out,” Wells Fargo Securities analysts wrote.
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