Although stocks were choppy all session long on Wednesday, the S&P 500 never dipped into the red, and managed to finish the day on a high note. The close of 1989.26 was 0.5% better than Tuesday’s close.
It wasn’t a bullish day for all stocks, however. Owners of Twitter Inc (NYSE:TWTR), Chipotle Mexican Grill, Inc. (NYSE:CMG) and Groupon Inc (NASDAQ:GRPN) were facing an uphill battle from the time the opening bell rang.
Here’s what happened.
Twitter Inc (TWTR)
For the third day in a row (with each day doing progressively more damage), Twitter lost ground in response to a swell of new and renewed concerns about the company’s viability.
Research posted by Sanford C. Bernstein and touted by the Wall Street Journal on Tuesday arguably got the ball rolling in the wrong direction — in a big way — for TWTR. Specifically, Bernstein suggested the company’s stock-based compensation costs were underappreciated and “uniquely treacherous”.
Already vulnerable following the Bernstein revelation, TWTR shares were sent nearly another 4% lower on Wednesday when it was reported Snapchat was stepping up its advertising game and RBC Capital Markets offered data suggesting advertisers were planning on spending less rather than more advertising dollars on Twitter.
Chipotle Mexican Grill, Inc. (CMG)
Just when it looks like Chipotle Mexican Grill has a shot at putting the near-term impact of its recent E. coli gaffe behind it, four employees at one of its stores in Boston contracted the Norovirus, forcing the company to temporarily close that location.
The E. coli outbreak that materialized in November of last year stopped spreading by December, and the CDC officially declared that outbreak over as of February 1st. The Norovirus cases discovered in Boston don’t appear to be related in any way to the E. coli epidemic. In the court of public opinion though, the news couldn’t have come at a more vulnerable time for Chipotle Mexican Grill. CRT Capital analyst Lynne Collier opined:
“We suspect that investors and consumers will be sensitive to this announcement, particularly in light of the adverse news flow over the last six months at Chipotle.”
Today’s 3% stumble for CMG left it 14% below its December peak, when the E. coli outbreak accelerated.
Groupon Inc (GRPN)
Last, but certainly not least, daily deals company Groupon saw its stock plunge 10% on Wednesday, following a downgrade of GRPN shares by UBS.
The famed-but-feeble e-commerce site has a few things working in its favor under relatively new CEO Rich Williams. But, UBS analyst Eric Sheridan still sees too much competition and not enough capital to let Groupon achieve Williams’ dream of making Groupon the go-to destination consumers think of when seeking “local” deals.
UBS maintained its target price of $3.20, but lowers its stance on GRPN from “Neutral” to “Sell.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
