Why Twilio Inc (TWLO), Humana Inc (HUM) and Nvidia Corporation (NVDA) Are 3 of Today’s Worst Stocks

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The first trading day of the new year wasn’t a bad one, but the buyers certainly weren’t stampeding. After gaining nearly 1% on an intraday basis, the sellers managed to beat the S&P 500 back to a close of only 2,257.83. That’s 0.85% better than last week’s (and last year’s) closing price, bit still leaves stocks on the fence.

Why Twilio Inc (TWLO), Humana Inc (HUM) and Nvidia Corporation (NVDA) Are 3 of Today's Worst StocksThe modest rally didn’t sweep every stock higher with it. Twilio Inc (NYSE:TWLO), Humana Inc (NYSE:HUM) and Nvidia Corporation (NASDAQ:NVDA) each got 2017 started by dipping into the red ink. Here’s the deal.

Nvidia Corporation (NVDA)

For the third time in the last four trading days, computer chip company Nvidia saw its stock lead the market’s losers. Today’s setback for NVDA was a decided 4.4%, translating into a 15% decline from Wednesday’s peak.

The prod for the pullback since the middle of last week is mostly some naysaying from Citron Research’s (and prolific, vocal short-seller) Andrew Left, who suggested via a tweet that NVDA shares had advanced too far, too fast last year, with most traders ignoring how much competition Nvidia will be facing in the immediate future. Left has set a price target of $90 for Nvidia stock.

Although constantly controversial, Citron’s chief may have a point. Up 224% in calendar 2016, the forward-looking price-to-earnings ratio of 37.8 is still a tough valuation to sustain indefinitely.

Humana Inc (HUM)

The initial assumption as to why shares of healthcare plan provider Humana fell 3.2% on Tuesday was a tweet from President-elect Trump. The comment was non-descript and non-committal, simply opining “People must remember that ObamaCare just doesn’t work, and it is not affordable — 116% increases (Arizona). Bill Clinton called it ‘CRAZY’.”

Although the sentiment isn’t new or surprising, investors interpreted it as an enhanced potential threat to HUM’s top and bottom lines.

The less apparent bearish prod that may have proven to be a drag on Humana shares was the end of a trial that will either approve or deny the effort from Aetna Inc (NYSE:AET) to acquire Humana. Although the official ruling isn’t out yet and the litigants’ arguments seemed more or less balanced as the case wore on, Tuesday’s weakness may partially suggest HUM shareholders aren’t optimistic the deal will get done.

Twilio Inc (TWLO)

Finally, don’t look too hard for a specific reason Twilio stock fell 8.2% today — you won’t find one. Rather, TWLO shares made for an easy target for bigger, fundamental reasons, rekindling a downtrend that extends all the way back to late September.

Twilio provides a variety of cloud-based telecom services. Its technology and platform are compelling, and marketable, but the stock’s valuation — even with the 59% slide since September’s peak — was still frothy. TWLO is still miles away from turning a profit, and with a price-to-sales ratio of 9.3 versus the market-norm near 2, even a swing to a profit would struggle to justify a stock price in the upper $20’s.

TWLO shares found technical support near $28.40 in mid-December, which sparked something of a rebound effort late in the month. Once the stock broke below that support level today, though, the sellers never looked back.

The wave of selling suggests some shareholders were looking to postpone a tax liability until 2017.

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/2017/01/why-twilio-inc-twlo-humana-inc-hum-and-nvidia-corporation-nvda-are-3-of-todays-worst-stocks/.

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