CBS Stock Slumps As Investors Mull The Les Moonves Factor

UPDATED with closing price. CBS shares fell 5% today as investors weighed the potential consequences of a damning New Yorker magazine article detailing allegations of sexual assault by CEO Leslie Moonves.

The stock ended the session at $51.28 a share on five times the normal trading volume. It has been on an up-and-down ride in 2018, losing more than 10% of its value since the start of the year.

While CBS fell 6% on Friday, the drop was mostly a reaction to a statement from the CBS board that it was looking into the matter. The article itself went online after the close of trading, so today is the first full day on Wall Street where the Moonves factor was fully in play. Six women came forward to tell the magazine’s Ronan Farrow about the misdeeds of Moonves, including their claims that he engaged in retaliation over the encounters.

Along with the entire media business, investors are keeping a watchful eye on today’s regularly scheduled meeting of the CBS board, during which the fate of Moonves will be more clearly determined. The company is also scheduled to report quarterly earnings on Thursday.

Todd Juenger, an analyst at Sanford Bernstein, issued a report maintaining his Outperform rating on the stock, which he upgraded CBS to in May after the news of it spurning the plan to recombine with Viacom. But he said the picture for Moonves casts a shadow on the stock from a financial perspective.

“While the specifics of this situation carry a heavier human and societal weight,” Juenger wrote, “the stock situation (relative to our Outperform rating) is not unlike other situations where we believe the long-term value of an asset is materially higher than the current market price, but there may be short-term catalysts that could impact the stock negatively in the near term. It is also not unlike other stock situations where there are foreseeable scenarios/risks that could materially reduce our value creation thesis over the long term entirely.”