Why Fitbit Inc (FIT), Deutsche Bank AG (USA) (DB) and Chesapeake Energy Corporation (CHK) Are 3 of Today’s Worst Stocks

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The market started out strong enough on Thursday, but as the session wore on, the sellers came out of the woodwork. The upward-revised GDP growth rate for Q2, to 1.4%, at least slightly accelerated the odds of an interest rate hike. By the time the closing bell rang, the S&P 500 was down 0.93%, ending the session at 2,151.13.

Why Fitbit Inc (FIT), Deutsche Bank AG (USA) (DB) and Chesapeake Energy Corporation (CHK) Are 3 of Today's Worst StocksLeading the way lower were Chesapeake Energy Corporation (NYSE:CHK), Deutsche Bank AG (USA) (NYSE:DB) and Fitbit Inc (NYSE:FIT). Here’s a closer look at what went wrong for each.

Fitbit Inc (FIT)

Just two days after Aetna Inc (NYSE:AET) announced it would partially or even fully reimburse the purchase of the Apple Inc. (NASDAQ:AAPL) smartwatch for some customers as a health maintenance tool — leaving rival Fitbit out of the loop — as well as only two days following the global debut of Fitbit’s highly anticipated Charge 2, FIT shares fell 11.3%.

The prompt for the pullback was a downgrade from Pacific Crest, which lowered its opinion on FIT from “Sector weight” to “Underweight” on reportedly weak initial sales of the newly launched device. Analyst Brad Erickson explained: “We continue to believe that a large portion of Fitbit owners stop using the device within months, which is a fundamental issue driving high churn and that will make growth more challenging.”

Deutsche Bank AG (USA) (DB)

As the old saying goes, when it rains it pours. That has certainly been true for Deutsche Bank of late. Already down nearly 17% for the month of September through Wednesday’s close, DB shares lost another 6.7% of their value today.

News that some of its hedge fund clients were taking idle cash and a few positions out of the bank’s hands was one of the drivers of the pullback. Not only do banks make money on cash balances and margin loans that use that cash as collateral, but also those funds can’t generate trading revenue for Deutsche Bank, as it’s being held elsewhere.

Fanning those bearish flames that burned DB on Thursday were reports that Deutsche Bank AG would very likely need to garner new capital, either by issuing debt, more stock or selling assets. Any of those options will crimp earnings, however.

And it’s not as if DB shareholders can expect any kind of bailout or governmental support. German Chancellor Angela Merkel made it clear the government does not intend to prop the bank up.

Chesapeake Energy Corporation (CHK)

Finally, still reeling from reports that activist investor Carl Icahn was losing interest in Chesapeake Energy, CHK lost another 9.3% on Thursday after reports broke that the Department of Justice is investigating the company.

The probe will look at Chesapeake Energy’s accounting methodology used when it acquired several oil and gas properties. Of particular interest is how the company calculates royalties paid to owners of the land developed by Chesapeake; Antitrust laws may have been broken.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/why-fitbit-inc-fit-deutsche-bank-ag-usa-db-and-chesapeake-energy-corporation-chk-are-3-of-todays-worst-stocks/.

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