Picking up where they left off on Monday, the bears accelerated their selling efforts today to drive the S&P 500 2.96% lower. The spark for the weakness was concerning economic news from China — its purchasing managers index .
The fallout from that data hit all stocks, but Netflix, Inc. (NASDAQ:NFLX), Freeport-McMoRan Inc (NYSE:FCX) and Dollar Tree, Inc. (NASDAQ:DLTR) were hit particularly hard in the wake of today’s drubbing. Here’s what happened.
Netflix, Inc. (NFLX)
Netflix was Tuesday’s biggest loser among the major names, and that’s saying something given how much the broad market fell. All told, NFLX shares slumped more than 8% when the market was reminded again of one of the company’s biggest vulnerabilities — there’s nothing it does that can’t be replicated by another company.
Apple Inc. (NASDAQ:AAPL) served up the reminder today when it was announced in a Variety report that it, too, , taking dead aim at Netflix’s original, home-grown shows like House of Cards and Orange Is the New Black. Although details were scant, the announcement wasn’t merely coincidentally timed with the .
That being said, NFLX may have also been pressured lower after Amazon.com, Inc.
(NASDAQ:AMZN) announced that members of Amazon Prime could … a feature not offered to Netflix customers.
Dollar Tree, Inc. (DLTR)
On the surface, it would appear that last quarter’s revenue miss coupled with disappointing guidance is the reason Dollar Tree took an 8.7% hit on Tuesday. And in some ways, that is the reason DLTR got dunked. In a bigger sense, though, the pullback may actually be a sign of doubt that the recent acquisition of Family Dollar is going to pan out as well as hoped.
For Q2, Dollar Tree lost $98 million, or 46 cents per share of DLTR, on sales of $3.01 billion. Excluding the cost of the acquisition, however, Dollar Tree would have earned 67 cents per share — easily topping estimates of 62 cents per share and the year-ago figure of 61 cents. The top line of $3.01 billion missed expectations for $3.04 billion.
The deal to buy Family Dollar only closed in early July, so it’s too soon to firmly assume the worst. But, with same-store sales growth of , and a dialed-back revenue outlook, investors seem less than thrilled so far.
Freeport-McMoRan Inc (FCX)
Last but not least, resource miner Freeport-McMoRan tumbled 8% today, spurred by a combination of falling commodity prices and a downgrade from Citigroup Inc (NYSE:C).
Copper prices — Freeport-McMoRan’s bread and butter — , extending a long streak of dwindling copper prices that .
It was just enough for Citigroup to lower its rating on FCX from a “buy” to “neutral,” and simultaneously lower its price target on FCX from $20 to $12 even though the bank is optimistic about copper prices.
:
“While Citi’s commodity team remains positive on copper pricing, the risk-reward for FCX is less compelling given their leverage. Using the current forward curve, FCX looks fairly valued on 2016, in our view … The company guided to an impressive operating cash flow estimate of $6.3 billion for 2016 at $2.25/pound copper and $54 per barrel oil, but this included a significant working capital drawdown that we estimate to be $1.8 billion. If we continue to model out the various commodity futures in our FCX model for 2017 and 2018, there is very little incremental deleveraging opportunity.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
