Convinced that strong job-growth numbers all but made a December rate hike inevitable, traders started the day in a bearish mood. By the time the closing bell rang, though, the market had time to digest October’s unemployment report and decide there’s a lot of upside to a strong economy. The S&P 500 ended the session at 2,099.2, down a mere 0.03%.
Not every stock recovered on Friday, however. Dr.Reddy’s Laboratories Ltd (NYSE:RDY), Freeport-McMoRan Inc (NYSE:FCX) and Tripadvisor Inc (NASDAQ:TRIP) all had a date with a bearish destiny. Here’s what happened.
Dr.Reddy’s Laboratories Ltd (RDY)
India-based drugmaker Dr.Reddy’s Laboratories may be operating production facilities that aren’t up to U.S. standards, according to the Food and Drug Administration. News of this possibility sent RDY shares careening today.
The company dropped the bomb on RDY investors on Friday, explaining the FDA sent an official letter to the company to discuss inadequate quality and oversight at three of its facilities in India. The FDA won’t be approving any drugs made at those plants until the problems are resolved.
Dr. Reddy CEO, G V Prasad said in a statement:
“We take quality and compliance matters seriously and stand by our commitment to fully comply with the cGMP quality standards across all of our facilities. We will respond with a comprehensive plan to address these observations within the stipulated time-frame of 15 days. We will continue to actively engage with the agency to resolve these issues and we have also embarked on an initiative to revamp our quality systems and processes, as an organization-wide priority.”
Investors weren’t moved, though, sending RDY shares 18% lower.
Tripadvisor Inc (TRIP)
Less than a month after jumping on news that peer and rival Priceline Group Inc. (NASDAQ:PCLN) would be using TripAdvisor website Booking.com to promote some of its properties, TRIP fell on news that the launch of its new Instant Book feature hadn’t gotten as much traction as had been hoped, in light of its cost and projections.
TripAdvisor earned 53 cents per share on $415 in revenue, both of which were up from year-ago levels. Analysts were calling for a profit of 55 cents per share of TRIP, however, and for a top line of $430 million.
Booking, as opposed to simply offering information, is a fairly new revenue source for TripAdvisor, and some analysts fear it could take a while for the company to refine it as a business model. Needham analysts Laura Martin and Dan Medina wrote:
“The [new] IB business model moves TRIP’s revenue streams away from clicks from traffic toward rev-share upon consumption. This shifts risk toward TRIP, and perhaps a higher return over time. We think it may create a revenue gap for TRIP in 2016 calculated as the average time between booking (click payment terms for Meta) and the actual hotel stay (consumption payment terms for IB) as the transition occurs.”
TRIP finished the day down 7%.
Freeport-McMoRan Inc (FCX)
Last but not least, this stock teased investors by acting like it was ready to recover beginning in September. But thanks to today’s 6% pullback from Freeport-McMoRan — and the 8.4% pullback from FCX for the week — it’s safe to say the stock’s anything but out of the woods yet.
The bulk of this week’s weakness from FCX shares was renewed weakness in copper prices, which are lower by 2.4% since Tuesday and are down about 5.5% since the mid-October peak (a huge slide for a commodity).
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
