The market may have managed to dig its way out of the red today, but just barely. The S&P 500‘s close of 2160.77 was a mere 0.05% better than Wednesday’s last price. Most traders were content to remain on the sidelines until Friday morning’s jobs report for September.
Not every trader was keeping their powder dry, though. Owners of Tesla Motors Inc (NASDAQ:TSLA), Mylan NV (NASDAQ:MYL) and Twitter Inc (NYSE:TWTR) were more than happy to shed their shares, setting up a big loss.
Here’s the deal.
Mylan NV (MYL)
On Thursday, pharmaceutical outfit Mylan saw its stock lose ground to the tune of 3%. With that setback, MYL shares are now off 26% from their early August peak.
The bulk of the selling of MYL has been rooted in the sky-rocketing price of its EpiPen. In late August, the U.S. Senate’s Judiciary Committee Chairman Senator Chuck Grassley flatly asked Mylan CEO Heather Bresch why the price of the potentially life-saving device had quadrupled since 2008, with little to no actual improvement of the device and the drug it delivered.
She answered, though it wasn’t an answer that led to a warm fuzzy feeling for MYL shareholders. Although not illegal per se, it was and still is becoming increasingly clear the company gouged payers simply because it can.
And, as it turns out, at least part of the EpiPen’s fiscal success was created illegally. After looking more closely at the numbers, the Centers for Medicare and Medicaid Services confirmed today that Mylan had misclassified the EpiPen as a generic device, lowering the rebate check it must deliver to the government for its purchases. The difference between what Mylan paid and what it should have paid is well into the tens of millions of dollars.
Tesla Motors Inc (TSLA)
Tesla Motors was downgraded by Goldman Sachs on Thursday, prompted by concerns the electric automobile maker is not only still on track to make a questionable acquisition of SolarCity Corp (NASDAQ:SCTY), but may also see its production growth pace slow at the same time its spending accelerates.
Goldman Sachs now rates TSLA as “Neutral,” down from a “Buy,” and lowered its price target on the stock to $185. Analyst David Tamberrino explained:
“We believe the proposed combination of Tesla and SolarCity — two high-growth, high-cash burn businesses — creates a higher risk entity given the combined ongoing capital needs and higher net leverage that would potentially result. We believe this creates potential incremental risk to Tesla and its legacy automotive business.”
TSLA shares ended the day at $201, down 3.6%.
Twitter Inc (TWTR)
Finally, all the hoopla about Twitter being acquired by Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) or Salesforce.com, Inc. (NYSE:CRM) or even Walt Disney Co (NYSE:DIS)? Never mind. As it turns out, all those alleged buyers aren’t quite so interested after all.
That’s the latest conclusion from technology news website recode.net anyway, trumping a rumor that surfaced two weeks ago calling Twitter a likely near-term acquisition target.
TWTR stock paid the price, of course. After gaining 33% over the course of the last two weeks on assumptions that a buyout was inevitable, Twitter shares gave up 20% of their value today when investors hear the disappointing assessment.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
