Traders didn’t come back from the holiday-abbreviated week in any better mood, sending the market lower for a fourth straight session. It’s one of the worst starts to the new year stocks have seen in a long, long time at a time of year that’s nearly always bullish.
Whatever the backdrop, it was a particularly horrible day for Caesars Entertainment Corp. (CZR), Clear Channel Outdoor Holdings, Inc. (CCO) and Continental Resources, Inc. (CLR). Here’s what went so wrong for each of them.
Caesars Entertainment (CZR)
After having a weekend to think about it, current shareholders of Caesars Entertainment are less than thrilled with the casino and resort operator’s restructuring plan.
The fact that debt-laden Caesars Entertainment is struggling and has been considering a restructure hasn’t exactly been a veiled secret. The detailed plans of the decision to merge with recently spunoff Caesars Acquisition Co., however, wasn’t announced until late last week.
The reason CZR stock plunged nearly 8% on Monday likely stems from the fact that this restructuring plan means even second-tier creditors could continue suing the company, claiming this new corporate entity unfairly favored private equity firms TPG and Apollo.
In other words, it may not be over yet. The deadline for bondholders’ majority approval is now January 9, although that date has been pushed back several times.
Clear Channel Outdoor Holdings (CCO)
Don’t look for a news-based reason Clear Channel Outdoor Holdings tumbled more than 12% on Monday — you won’t find one. Rather, the reason for the sharp slide from CCO stock is much more nuanced. After reaching a new six-year high of $11.25 on Friday to top off what ended up being a 66% rally since mid-October, some profit-takers decided enough was enough and it was time to get out.
A big move lower doesn’t inherently mean the deck’s been cleared for a renewal of the bigger-picture rally, however. Clear Channel Outdoor Holdings isn’t profitable on a trailing basis, and isn’t expected to be this year either (although the projected loss of 8 cents per share of CCO stock in fiscal 2014 is expected to be cut in half for 2015).
Continental Resources (CLR)
Crude oil’s drubbing was renewed today, with the commodity falling to a five and a half year low near $50 per barrel. All energy stocks fell sharply against the backdrop of the bad news, but none as much as Continental Resources shares. When all was said and done, CLR stock closed down almost 11%.
To be clear, Continental Resources didn’t “do” anything in particular to put CLR stock at the bottom of the performance barrel. Traders have made most of the major oil names their primary target for any particular ever since the oil rout heated up in October. Continental Resources was simply the most accessible target today, possibly because CEO Harold Hamm has managed to keep himself and his company in the limelight by contesting a $1 billion divorce settlement with his wife.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
