A decent start for stocks on Wednesday quickly turned into red-alert session, with the selling prompted by nothing in particular … nothing other than a disinterest in buyers. The 0.84% tumble the S&P 500 took today left it at 2,249.92, hovering just a hair above a key technical support level.
Leading the bearish charge were Fitbit Inc (NYSE:FIT), Twilio Inc (NYSE:TWLO) and Nvidia Corporation (NASDAQ:NVDA). None of them did anything wrong, per se. All of them just made for easy targets on Wednesday.
Here’s the deal.
NVIDIA Corporation (NVDA)
Infamous and highly vocal short seller Andrew Left, of Citron Research, is at it again, today taking aim and computer chip maker Nvidia.
Granted, up more than 230% since the beginning of the year (and up more than 50% just since the beginning of November), NVDA made for an easy, vulnerable target. In fact, Left is actually a fan of the company. He’s simply concerned that the big runup this year ignores some specific headwinds the company will be facing in 2017.
Specifically, Citron’s chief is concerned that competitors are coming up with some impressive alternatives, and that the company’s intellectual property isn’t going to be as much of a money maker in the coming year as the market is presuming.
Left has set a target of $90 for NVDA. That’s still considerably less than today’s close of $109.25, following the stock’s 7% tumble on Wednesday.
Twilio Inc (TWLO)
By all accounts, shares of cloud-based telecom service provider Twilio should be up today. The company recently expanded its relationship with Amazon.com, Inc. (NASDAQ:AMZN), securing some new revenue. And, just yesterday William Blair analyst Bhavan Suri cautioned that those traders that are betting against TWLO are underestimating how well the company can defend its vulnerabilities.
Yet, there it is … TWLO ended the day down 7.4%, quelling the glimmer of bullish hope that materialized with yesterday’s and last week’s measurable gains.
There was no identifiable catalysts for the selling. But, it’s reasonable to assume that at least part of the headwind stems from the fact that a massive number of TWLO shares became free-trading shares last week, and those early investors are looking to lock in some profits while they can at a price they can live with.
Fitbit Inc (FIT)
Finally, like Twilio, Fitbit shares were sent considerably lower today after dishing out a respectable gain yesterday. And like TWLO, FIT fell 5.1% without any specific catalyst.
The bullish pop for FIT yesterday was the knee-jerk response to news that the Fitbit app was one of the most-downloaded apps at the Apple Inc. (NASDAQ:AAPL) iTunes store on Christmas day. With a day to mull it over though, the market decided one good day or even one good shopping season isn’t going to be enough to guarantee a bright future.
The company is simply struggling to keep up with competing watches that do more, and simultaneously compete with fitness trackers that cost less.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
