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Comcast stock tanks after Sky win

Comcast stock tanks after Sky win 2

Shares of Comcast tanked 8 percent Monday after the company beat out Twenty-First Century Fox to acquire British broadcaster Sky.

The stock fell as low as $34.75 in morning trading, on pace for its worst day since January 2009.

Comcast outbid rival Fox on Saturday with a $40 billion takeover offer in a rare three-round auction that pitted two of America’s largest media companies against one another. Sky earlier Monday advised its shareholders to accept the offer “immediately.”

But at least one analyst was bearish on the bid. Craig Moffett of Moffett Nathanson downgraded the stock to neutral from buy, and lowered its target price to $36 from $41.

“The concept of the ‘winner’s curse’ is central to auction theory. By the very nature of an auction, the so-called ‘winner’ of an auction is the party willing to pay more for an asset than any other party believes it is worth,” Moffett wrote in a note published Monday.

Sky, as a linear TV provider, could prove to be a burden for Comcast, Moffett said.

“Investors will now have to greet Comcast’s earnings reports with the trepidation that comes from owning a secularly challenged asset… for which they grossly overpaid,” he said.

With Monday’s plunge, shares of Comcast are down more than 10 percent in 2018 and flirting with bear market territory, now 20 percent off 52-week highs.

Disclosure: Comcast owns NBC Universal, CNBC’s parent company.

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