Send me real-time posts from this site at my email

Why CuriosityStream Stock Plummeted Today

What happened

Shares of CuriosityStream (NASDAQ: CURI) have plummeted today, down by 14% as of 1:40 p.m. EDT, after getting a double downgrade from Wall Street. BofA Securities cut its rating on the stock from buy to underperform while sticking by its price target of $14.

So what

The rating change is largely due to the fact that CuriosityStream shares had nearly doubled over the course of a month, raising potential valuation concerns and achieving the $14 price target that BofA had previously set. Much of that rally was driven by the fact that the technology company, which specializes in streaming educational content, was named as a preliminary addition to the Russell 3000, one of the most high-profile market indexes for small cap stocks.

Image source: CuriosityStream.

BofA is encouraged that CuriosityStream has already contracted 90% of expected 2021 revenue, but downside risks are now magnified following the rally over the past month. Hefty investments in the business that will be necessary to grow sales may put pressure on gross margins, and CuriosityStream has reported worse-than-expected earnings before interest, taxes, depreciation, and amortization (EBITDA) results for several consecutive quarters.

Now what

It's also possible that competition from larger media giants will intensify as the streaming industry is seeing considerable consolidation, while dominant players are investing aggressively in original content in an effort to differentiate their streaming offerings. The flip side of the consolidation coin is that CuriosityStream could potentially become an acquisition candidate, BofA notes.

10 stocks we like better than CuriosityStream Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and CuriosityStream Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 7, 2021

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CuriosityStream Inc. The Motley Fool has a disclosure policy.


Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue