Crude oil apparently wasn’t done plunging yet, and today it continued to take all stocks lower with it. Oil prices fell 3.8% on Friday, closing at $58, dragging stocks lower to the tune of about 1.6%. The S&P 500‘s close of 2002.37 was the lowest close we’ve seen from the large cap index in weeks, with the pace of selling heating up as the closing bell approached.
Among the worst of the worst stocks today were shares of Windstream Holdings, Inc. (WIN), Shutterstock Inc (SSTK) and Westlake Chemical Corporation (WLK). Incredibly enough, it wasn’t worrisome earnings results that torpedoed any of these names. It was old-fashioned certainty that each was poised to disappoint that hit these names on Friday.
Windstream Holdings, Inc. (WIN)
Investors don’t seem to be too pleased with the new CEO of Windstream Holdings. On Thursday, the company announced Tony Thomas had been named as its new chief executive, taking over for Jeff Gardner. This morning, Thomas told investors that a new CFO had also been installed, Bob Gunderman.
Fearing too much change too fast could be disruptive, shareholders dumped WIN stock en masse, driving it nearly 8% lower.
The core of the concern from shareholders may be the possibility that a new CEO and a new CFO disrupt the company’s plans to spinoff some of its properties into real estate investment trust. That was the most compelling news Windstream Holdings had unveiled in a long while when the idea was first floated in July.
With that restructuring now in jeopardy though, or at least possibly delayed, investors see little reason to continue holding WIN stock — for now, anyway.
Shutterstock Inc (SSTK)
Anyone hoping Shutterstock was a buyout target has to be at least a little disappointed in today’s news. Software company Adobe Systems Incorporated (ADBE) announced it was going to acquire Shutterstuck competitor Fotolia in a deal said to be worth $800 million.
While Adobe’s purchase doesn’t preclude Shutterstock from being bought out by another company, Adobe was the best likely bet for an acquisition.
Though Fotolia is a privately-held company and does not disclose its results, it’s likely that the price of SSTK stock was just too frothy for Adobe to seriously consider. Even with Friday’s 13% plunge, SSTK is valued at a trailing price-to-earnings ratio of 97.4 and a forward-looking one of 42.9. On a forward-looking basis that’s about three times the market’s normal P/E ratio.
Westlake Chemical Corporation (WLK)
Westlake Chemical shares fell 6% on Friday, though for no particular reason other than commodity prices are plunging, and taking related stocks along for the ride.
It may be worth noting Westlake Chemical is better-shielded from commodity price volatility than the market is giving it credit for. Its specialty products are critical to the production of olefins and vinyl, which are in turn used to make products like packaging and construction hardware. By the time consumers and business use these goods, much of the price volatility of the underlying chemicals has been abated or washed out.
Nevertheless, investors have driven WLK down to the tune of 44% since early September, in step with the commodity implosion.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
