During one of the most volatile weeks for the stock market in U.S. history, a rash of earnings reports, M&A chatter and other developments drove movement in several major entertainment, social media and communications companies.
Social media giants Snap Inc. and Twitter Inc. posted record gains after decidedly beating Wall Street estimates for their most recent quarters. Snap's shares jumped nearly 50% to close at $20.75 on Feb. 7, the day after the company reported a 5% year-over-year increase in daily active users during the fourth-quarter 2017, and a 72% year-over-year increase in revenue to $285.7 million.
A number of analysts were quick to upgrade the Snapchat parent company's stock following the earnings beat, Barclays analyst Ross Sandler raised his price target for Snap to $21 from $18 in a Feb. 7 research note, citing higher-than-expected revenue and daily active users, among other factors. He predicted that accelerating user and revenue numbers would not be a one-quarter event.
Other analysts, though, remained cautious about the company's future growth prospects, with Jefferies analyst Brent Thill writing, "A good quarter doesn't change our fundamental view that Snap has its work cut out." Snap shares closed at $18.80 on Feb. 9, up 37% from their Feb. 2 closing price.
Twitter's shares, meanwhile, jumped up nearly 15% on Feb. 8 a few hours after the company reported its first profitable quarter as a publicly traded company. But Pivotal Research Group analyst Brian Wieser in a Feb. 8 research report cut the company's rating to "sell" from "hold" on what he called an "unwarranted" stock run-up. Twitter's shares closed at $31.51 on Feb. 9, up almost 22% from the Feb. 2 closing price.
In the media sector, Viacom Inc.'s shares mostly saw a steady decline during the week, but jumped Feb. 8 after the company announced plans to launch a direct-to-consumer streaming product by the end of its current fiscal year. Viacom CFO Wade Davis said during a Feb. 8 earnings conference call that the product is going to roll out initially in the U.S. and feature "tens of thousands of hours of content that cuts across the library we have on a global basis."
Davis noted that the company has scaled back on licensing its content to third parties in preparation for this service. This strategy has caused "some short-term pain" for Viacom as it forgoes licensing revenues from third-party subscription video-on-demand services in the name of long-term success. All in all, Viacom's revenue for the quarter ended Dec. 31, 2017, was $3.07 billion, down 7.6% year over year from $3.32 billion.
Viacom's stock closed at $32.87 on Feb. 9, up roughly 2% from its Feb. 2 close.
In terms of other M&A chatter, DISH Network Corp. shares rose slighty on Feb. 7 after Citigroup media analyst Jason Bazinet raised the satellite company to "buy" on speculation DISH could be bought for as much as $95 per share. Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak told Multichannel News that he also ultimately sees a sale of DISH as inevitable over time, adding that while Verizon Communications Inc. is perhaps the most likely purchaser, T-Mobile US Inc. could also potentially have interest. Wlodarczak explained that if T-Mobile were to add DISH's hefty spectrum holdings to its own spectrum portfolio, the wireless company would be "in a far better position spectrum-wise than Verizon, which would allow them to accelerate the market share gains they are already making."
T-Mobile CEO John Legere said during a Feb. 8 earnings conference call that he does see further convergence ahead for his company, while noting a number of possibilities, including DISH, Sprint Corp., United States Cellular Corp., Comcast Corp. and Charter Communications Inc. as potential partners.
Despite the speculation, DISH shares closed at $43.40 on Feb. 9, down more than 7% from the Feb. 2 close. Shares in Verizon closed at $49.88 on Feb. 9, down almost 6% from the Feb. 2 close.