The new trading week got started on a bullish foot despite a dose of merely-mediocre economic news. The modest decline in the value of the sky-high U.S. dollar was enough of a glimmer of hope to send the S&P 500 up 1.35% to close of 2081.19.
Not every name was in the black today, however. E I Du Pont De Nemours And Co. (NYSE:DD), Pandora Media Inc. (NYSE:P) and Netflix, Inc. (NASDAQ:NFLX) all dipped deep into the red ink, for a variety of reasons.
Netflix (NFLX)
The wild roller-coaster ride Netflix shareholders have been experiencing lately didn’t abate today, with Monday’s near-4% lull bringing the March implosion to a whopping loss of 11%.
Today’s meltdown was spurred by a downgrade that made a little too much reasonable sense to the market. Evercore now deems NFLX a “sell” rather than a “hold,” and Evercore analyst Ken Sena lowered his price target on NFLX from $450 to $380, pointing out how net neutrality and constantly improving technology are opening the door to new competition for Netflix.
“As many of the larger traditional cable/telco distributors have content scale from the standpoint of acquisition, we see them leveraging that scale into new forms of distribution, such as the ‘everywhere’ products. But generally speaking, advantage will still boil down to the quality of the content and the scale of distribution.”
Pandora Media (P)
Pandora Media doled out a nice object lesson on Monday, reminding investors that believing every rumor you hear can be hazardous to your portfolio’s health.
The most recent rumors regarding Pandora Media surfaced on Friday, suggesting the company was a buyout target. P shares jumped 7.2% on the whisper, but having had a weekend to recollect that this is a heavily recycled rumor, traders bailed out on their P holdings … again. The stock finished the day down more than 5%.
E I Du Pont De Nemours (DD)
E I Du Pont De Nemours –– better known just as chemical company DuPont –– failed to fend off two headwinds on Monday.
The first of those headwinds was a downgrade from Merrill Lynch, which now deems DD an “underperform,” down from the prior “buy” rating (skipping a “neutral” rating in the process). Merrill also lowered its price target on DD to $76 per share. A poor market outlook for the agricultural and chemical industries paired with an oddly strong U.S. dollar was the basis for the downgrade.
Simultaneously, hedge fund Trian rekindled the discussion of placing at least one of its own representatives on the board of directors, vocally pointing out how several of the company’s largest shareholders were in favor of such a change.
Du Pont De Nemours has been quick to suggest that a strong Trian presence in the board room isn’t in the company’s or DD shareholders’ best interest. That message seems to be falling on deaf ears, though. Whatever the merits of a new board of directors mix, all investors may be increasingly worried the brewing battle in the board room could be distracting to the point of being a threat to the company’s near-term results.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
