Following through on Friday’s bullish reversal effort (and with no news to give the bulls reason to hesitate), the market managed to start the new week on a bullish foot. The S&P 500 closed up 1.28%, at 2,104.18. Oil and gold prices also dished out sizable gains.
Monday wasn’t a winner for all stocks, however. Groupon Inc. (NASDAQ:GRPN), Twenty-First Century Fox Inc. (NASDAQ:FOX) and JD.Com Inc. (NASDAQ:JD) all lost ground wile the market made forward progress. Here’s what happened.
JD.Com (JD)
Once the bad news started to roll the wrong direction for JD.com, the avalanche developed quickly. JD never had a chance.
Morgan Stanley fired the first shot, downgrading JD from “overweight” to “equal-weight.” The firm also lowered its price target on JD stock to $35 on concerns the e-commerce name will be facing more and more Chinese competition. Morgan Stanley analyst Robert Lin explained:
“Our new PT of US$35 is down 15% from our previous PT of US$41 mainly driven by slower 3P GMV growth due to increasing competition expectation and macro slowdown. We believe these issues could weigh on sentiment in 2H15. We remain positive on JD.com’s long-term fundamentals and see share price upside, but other players (i.e. Alibaba (BABA), Vipshop (VIPS) and Jumei (JMEI)) present better value.”
Things went from bad to worse after it was announced that Alibaba Group Holding Ltd (NYSE:BABA) would be investing $4.6 billion Suning Commerce, which competes directly with JD.com.
JD finished the day down 6.3%.
Twenty-First Century Fox (FOX)
Whether it was a merited response or not remains to be seen, but Twenty-First Century Fox shares fell about a pecetnage point on Monday while the market was rallying in the wake of news that its latest film — a reboot of the Fantastic Four franchise — saw a disappointing box office take for its all-important debut weekend.
All told, the movie generated $26.2 million worth of ticket sales last weekend, falling short of the $40 million that had been projected for the FOX flick.
The much-ballyhooed superhero film didn’t even top Mission Impossible – Rogue Nation’s $29.4 million second-week box office sales.
Groupon (GRPN)
Last but not least, although Groupon announced disappointing second quarter earnings on Friday — and GRPN shares paid the price for those weak numbers — traders weren’t done unloading the stock yet. Groupon fell another 3.2% on Monday, dipping further into new 52-week low territory.
That being said, analysts may have contributed to the renewal of the selling effort, dishing out more than a few downgrades of the struggling online-deals company. Brean Capital, for instance, lowered its price target on GRPN from $11 to $8, while Deutsche Bank lowered its target from $8.50 to $6.40. Raymond James and Sterne Agee CRT also dropped their price targets on GRPN.
Deutsche Bank’s analysts may have summed up the tumbling target prices best by saying “Downside risks include competition, negative sentiment swings in local internet, missing estimates, and future dilutive merge and acquisition.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
