Fox Corporation (NASDAQ: FOXA) shares dropped 17% in the trading session following the announcement of an agreement to acquire Roku for $22 billion. The acquisition deal, structured as a mix of cash and stock transactions, was highlighted in the second-quarter 2026 investor letter for the TCW Relative Value Mid Cap Fund. TCW Funds, the investment management firm behind the letter, identified Fox as one of its weakest performers for the quarter alongside Primoris and Venture Global.
Investor concerns regarding the transaction centered on the large size of the deal, the use of debt financing, and the potential for equity dilution. These factors contributed to the significant price decline observed immediately after the announcement. The letter noted that Fox Corporation, an American media company operating across cable network programming, broadcast television, digital platforms, and entertainment production, had posted a year-to-date pullback of approximately 14.26%.
As of September 30, 2026, Fox Corporation closed at $62.65 with a market capitalization of $26.42 billion. The stock traded within a 52-week range of $48.34 to $76.39 during this period. In its broader market commentary for the second quarter of 2026, TCW Funds reported that equities advanced, with the S&P 500 reaching record highs despite volatility stemming from a Federal Reserve leadership transition and Middle East tensions. The fund's own ticker, TGVOX, returned 14.10% for the quarter compared to the Index's 13.40% return.
The firm noted that S&P 500 earnings growth estimates rose from 18.8% to 23.1%, supported by resilient economic conditions and AI-related data center spending. Looking ahead, TCW Funds indicated that elevated valuations and thin margins for error make markets sensitive to policy and earnings developments. The firm stated it favors resilient, cash-generative businesses while noting that themes such as AI, digital infrastructure, and energy transition remain supportive.
Separately, regulatory scrutiny of the proposed acquisition has increased, with the Department of Justice deepening its review of the deal involving Roku, Inc. (NASDAQ: ROKU). According to Insider Monkey data, 60 hedge fund portfolios held Fox Corporation at the end of the second quarter, up from 43 in the previous quarter. Despite this increase in institutional holding, the firm maintains that certain AI stocks offer greater upside potential and carry less downside risk compared to Fox Corporation.