Inspired rather than discouraged by what’s quickly becoming an inflation problem, the buyers picked up on Wednesday where they left off on Tuesday … buying. The S&P 500’s close of 2,349.25 on Wednesday was 0.50% higher than Tuesday’s last trade. Strong retail sales last month despite the inflation surge, led to traders seeing the glass as half-full rather than half-empty.
Here’s what investors need to know.
American International Group Inc (AIG)
Bad news for American International Group shareholders today … AIG stock tanked to the tune of 9.0% following news that it booked a huge loss last quarter.
For the record, the loss wasn’t an operating one. The insurer would have reported a profit of 62 cents per share of AIG were it not for the $5.6 billion write-down it imposed on itself to account for likely insurance claims it must pay in the future. Still, even stripping out the one-time charge, the bottom line fell short of the expected profit of $1.14 per share.
The company tried to quell some of the impact of the news by adding $3.5 billion worth of funding to its existing stock-buyback program, but AIG shareholders weren’t impressed.
LendingClub Corp (LC)
AIG wasn’t the only stock to take a hit in the wake of earnings news on Wednesday. Online-lender LendingClub reported an operating loss of 2 cents per share versus a slight profit for the same quarter a year earlier. Operating revenue fell 4% on a year-over-year basis, with the company hitting a headwind that isn’t expected to abate soon.
LendingClub ran into trouble in the middle of last year when its marketing approach was called into question. Specifically, some of the providers of the company’s capital it was lending out were granted special incentives that obfuscated the true risk/reward measurements of the organization’s loan portfolio. Struggling to offset the discontinuation of those incentives, LendingClub’s expenses ticked higher last quarter.
LC shares ended the day down 4.7%.
Fossil Group Inc (FOSL)
Finally, watchmaker Fossil Group isn’t doing nearly as well with wearables as it thought it would … at least according to Wells Fargo analyst Ike Boruchow, who downgraded FOSL from “Market Perform” to “Underperform” today in response to the company’s disappointing Q4 report posted Wednesday morning. He explained, “Fossil’s fourth-quarter print was in and of itself, ‘not much worse than feared’; however the implications on the go-forward operations leave us with a growing list of concerns on a business that is caught in the crosshairs of an evolving category amid shifting consumer
Instinet analyst Simeon Siegel echoed the same sentiment, noting “The one category that is growing is margin dilutive and its ultimate scalability remains unproven, at the same time management is suggesting it will drop price to move units.”
FOSL closed down 14.8% on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.