Stocks doled out decent result on Monday … the sixth anniversary of the bull market. The S&P 500 finished the day at 2079.43, up 0.4%.
Not every stock was able to eke out a small gain today, however. BlackBerry Ltd (NASDAQ:BBRY), Alibaba Group Holding Ltd (NYSE:BABA) and Alcoa Inc. (NYSE:AA) all ended the day rather deep in the red despite the broad bullish tide. Here’s what happened.
BlackBerry (BBRY)
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BlackBerry may well be in the midst of a major turnaround, but the market’s certainly not buying it yet.
The new-and-improved BlackBerry is one that’s focused more on its software and less on its phones, essentially ceding any meaningful smartphone sales to far more dominant Apple Inc. (NASDAQ:AAPL) iPhones and Android-powered devices.
Analysts aren’t even sure that’s going to be a viable business model anytime soon though. Goldman Sachs downgraded BBRY to a “sell” this morning, citing concerns that the software-oriented model was still shaky. Goldmsn Sachs analyst Simona Jankowski explained:
“We think the success of BlackBerry’s turnaround hinges on its ability to grow its Enterprise Mobility Management (EMM) software business, where competitors include Mobile Iron, Airwatch, and Good. BlackBerry has set a target of $500 million in Software segment revenues for fiscal 2016(Feb), up from $250 million in fiscal 2015. We expect it to fall well short of that target and model revenues of $426 million.”
BBRY finished the day down more than 7% in the wake of the downgrade.
Alibaba Group Holding (BABA)
As if shareholders of Alibaba Group Holding hadn’t suffered enough lately, another round of selling blasted shares again today. Monday’s 2% stumble from BABA brings the selloff from November’s peak to a whopping 31%.
The latest batch of weakness was sparked by new oversight that could restrict future sales at the company’s online shopping site, Tmall. After being accused of selling counterfeit goods and not preventing some vendors from deceptively pushing their products onto the featured “top seller” list, Alibaba Group Holding has been all but forced by Chinese regulators to update sales and marketing policies that will certainly have some sort of adverse impact on BABA.
The full potential impact of such a change isn’t clear, but the downside of such a change was enough to lead Credit Suisse to lower its target price on BABA. Though the investment bank and research firm still rates BABA as an outperform, the new target price of $112 is down a dollar from the prior target of $113.
Alcoa (AA)
Aluminum company Alcoa is scaling back its reliance on the aluminum industry and wading deeper into titanium waters. Investors are none too happy with the way the company is going about its transition, though, if today’s 5% tumble from AA is any indication.
The prompt for the pullback was mostly news that Alcoa was acquiring titanium company RTI International Metals, Inc. (NYSE:RTI), exchanging 2.83 shares of AA for every outstanding share of RTI. The exchange rate implies a 40% premium to the price RTI International Metals shares closed at on Friday.
The migration of an aluminum-intensive portfolio to one that includes a healthy dose of titanium is one that will allow Alcoa to participate in more aerospace technology initiatives. Current shareholders seem to be worried, however, that Alcoa is moving too fast and giving away too much to get into the titanium game.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.