What would have likely been a quiet (and even bullish) start to 2016’s trading ended up being upended right out of the gate, as economic trouble in China sparked a bearish ripple effect across all the globe’s equity markets.
By the time the closing bell rang, the S&P 500 was at 2012.69, down 1.5%.
It could have been worse, though, and for owners of JD.Com Inc (ADR) (NASDAQ:JD), Netflix, Inc. (NASDAQ:NFLX) and Tesla Motors Inc (NASDAQ:TSLA), it was worse.
JD.Com Inc (JD)
Most Chinese stocks were deep in the red Monday, but leading the way was JD.com with an 8.5% stumble.
The prod for the pullback from Chinese stocks was a disappointing set of PMI numbers. Broadly speaking, they’ve been a little too weak for a little too long, and China’s investors finally assumed the worst.
While weakness in Chinese stocks works against Chinese companies in the sense that new stock market wealth was inspiring much of the country’s homegrown consumerism, consumer-oriented names like JD — an online-shopping website — are deemed particularly vulnerable.
For the record, peer and rival Alibaba Group Holding Ltd (NYSE:BABA) wasn’t too far behind with a 5.7% selloff of its own.
Tesla Motors Inc (TSLA)
The good news is, Tesla Motors produced a total number of electric vehicles last quarter to exceed the lower end of its projected production range. The bad news is, the “just barely” nature of the total spooked some TSLA shareholders who were expecting a triumphant tally.
All told, Tesla Motors delivered 17,400 automobiles during Q4 of 2015, translating into total deliveries of 50,580 cars for the year. A November statement from the company told TSLA investors it was planning to deliver between 17,000 and 19,000 electric vehicles in the fourth quarter, or between 50,000 and 52,000 for the year.
Not all observers are seeing the glass as half-empty, however. Global Equities Research analyst Trip Chowdhry opined:
“We are maintaining over-weight rating on Tesla and maintaining our 12-18 months price target of $385, which is based on a revenue multiple of 6X FY2016 estimates of $8.89 Billion. We are estimating Tesla could deliver 85,000 Auto Units (Model S and Model X), which is based on the company guidance of average per week production and deliveries of 1,600 to 1,800 Auto Units in FY2016.”
TSLA shares ended the day down 6.9%.
Netflix, Inc. (NFLX)
Last but not least, streaming-video giant Netflix was on the wrong side of analyst action Monday, as Robert W. Baird & Co. downgraded NFLX to a neutral rating.
At the heart of the downgrade were concerns about a near-term slowdown in Netflix’s U.S. subscriber growth.
While the pair are still optimistic on Netflix or the long haul — expecting market penetration to grow from 47% of U.S. broadband subscribers now to 60% within seven years, the two analysts also acknowledged the percentage of U.S. broadband subscribers fell slightly during the fourth quarter. That lull suggests the company has some (potentially expensive) work to do in the meantime.
Baird’s analyst also lowered their price target on NFLX from $128 to $115, sending the stock 4% lower.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
