Tuesday was another wobbly day for stocks despite the decidedly strong number of housing starts and building permits. By the time the closing bell rang, though, the bears won out. The S&P 500’s close of 2,030.77 was 0.14% lower than Monday’s closing level.
A bunch of stocks were completely up-ended though, even though the broad market wasn’t. Among the worst offenders were Tesla Motors Inc (NASDAQ:TSLA), Micron Technology, Inc. (NASDAQ:MU) and Harley-Davidson Inc (NYSE:HOG).
Here’s what went wrong.
Tesla Motors Inc (TSLA)
Tesla Motors, once put on a pedestal by the market, is losing that new-car smell and showroom shine with consumers. As a result, TSLA shareholders are losing patience. TSLA stock finished down nearly 7% on Tuesday following a rather scathing criticisms from consumer-awareness and product-rating organization Consumer Reports.
Based on a survey of 1,400 Tesla owners, Consumer Reports found that — despite the same publication’s glowing review of the Tesla Model S just a couple of months earlier — problems with the drivetrain, charging equipment, console and several nuisances like squeaks and rattles were happening a little too often for a vehicle with a price tag in the high five digits.
The overall experience was measured as so disappointing that Consumer Reports dropped its reliability rating on the Model S to below average. That revised rating appeared to inflict the bulk of the damage suffered by TSLA today.
Harley-Davidson Inc (HOG)
At the opposite end of the motor vehicle spectrum is Harley-Davidson, although it didn’t fare any better than TSLA did on Tuesday. In fact, it fared a bit worse, with HOG closing 14% lower.
The catalyst for the setback was Q3 earnings. Harley-Davidson earned 69 cents per share on $1.32 billion worth of sales. Analysts were expecting a profit of 78 cents per share of HOG stock, although the pros were calling for a top line of only $1.21 billion.
However, the majority of the stock’s stumble likely stemmed from an alarming outlook. Harley-Davidson sees a very competitive environment for the “foreseeable future,” which the market interpreted in a highly pessimistic light. HOG put the outlook in quantifiable terms for the current year, though, now calling for total shipments of between 265,000 and 270,000 units versus an initial outlook for 282,000 to 286,000 units.
Micron Technology, Inc. (MU)
Last but not least, Micron Technology shares fell 11% on Tuesday after Redstone Technology Research downgraded MU, explaining its concern in very plausible terms. Redstone’s Jagadish Iyer said:
“In FY15, Micron cost/bit reduction of 12% y/y was better than ASP erosion of 10%, keeping DRAM gross margins healthy on full-year basis though bit growth was poor at 2%. As we analyze Micron’s recent earnings commentary and our own industry checks, we firmly believe Micron is likely to underperform industry bit growth of 20-25% y/y in FY16 with greater portion of 20nm bits coming out predominantly in FY17… we now estimate FY16 DRAM bit growth to be ~16% followed by ~27% in FY17 while consensus thinking is for Micron to perform in line with industry bit growth of 20-25% in FY16.”
The Redstone downgrade recategorized MU as a “short,” down from a prior rating of “neutral.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
