The bulls hit the ground running on Wednesday morning, perhaps inspired by a strong existing-home sales pace for May … a nine-year high. The real estate market news didn’t obscure the fact, however, that on Friday the world will be hearing about an all-important Brexit decision that could rock the stock market. By the time the closing bell rang, the S&P 500 was at 2085.45, down 0.17%.
It wasn’t a merely tepid day for all stocks, however. FedEx Corporation (NYSE:FDX), HP Inc (NYSE:HPQ) and Tesla Motors Inc (NASDAQ:TSLA) each used more than their fair share of red ink, albeit for understandable reasons.
FedEx Corporation (FDX)
FedEx shares lost 4.5% of their value on Wednesday not because of something said, but because of something it didn’t say. It didn’t offer any real details about the fiscal impact the recent acquisition of European delivery service TNT may make this year.
Last quarter, the company’s fourth fiscal quarter of 2016, FedEx earned $3.30 per share, topping expectations for a gain of $3.26 per share of FDX. Revenues grew 7.4% to $13 billion, topping estimates of $12.8 billion.
Yet, FDX shareholders couldn’t help but notice the lack of information regarding the $4.8 billion acquisition of Dutch shipping outfit TNT. FedEx has offered some perspective on the impact the deal may have next year, but traders have little visibility for fiscal 2017.
HP Inc (HPQ)
HP — the consumer-oriented side of a divided Hewlett-Packard — surprised HPQ investors today (and not in a good way) following last night’s release of its Q3 guidance, along with an updated sales strategy for its printers.
For the quarter currently underway, the company now anticipates earnings of between 43 and 46 cents per share, up from prior guidance of between 37 and 40 cents per share, and better than the average profits of 39 cents per share of HPQ analysts had been modeling.
Shareholders were more concerned about a shift in market plans, however, than elated by the outlook. In simplest terms, HP will be doing away with incentives that push printers through the distribution channel. Rather, the company plans to induce more consumer demand, putting the company into somewhat unfamiliar territory.
HPQ ended the day down 5.4%.
Tesla Motors Inc (TSLA)
Last but not least, most likely anyone reading this is already keenly aware of why Tesla Motors shares plunged more than 10% on Wednesday. But on the off chance a few TSLA shareholders have yet to hear the news, CEO Elon Musk is pushing the company to acquire close-cousin SolarCity Corp (NASDAQ:SCTY).
There are a handful of issues with the pending deal. The biggest among them is the simple fact that SolarCity is a debt-laden, cash-burning entity and there’s no end in sight to its problems despite the optimistic chatter that occasionally blows past the company.
Another affront to Tesla shareholders: Musk is also the Chairman of the Board for SolarCity, as well as the biggest SCTY shareholder. He would stand to gain hundreds of millions of dollars if Tesla paid his suggested price for SolarCity, leaving TSLA investors wondering what his true motivation is.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
