Still a bit stunned from Monday’s terrible start to the new year, investors tepidly waded back into the market on Tuesday. The S&P 500 inched up to a close of 2016.72, up 0.2% for the day. That’s still not enough to push the index back above key technical levels, however.
Not every name was on the fence. Fitbit Inc. (NYSE:FIT), Pandora Media Inc. (NYSE:P) and General Motors Company (NYSE:GM) all used more than their fair share of red ink on Tuesday. Here’s what investors need to know about those setbacks.
Fitbit Inc. (FIT)
At another time and in another situation, news that Fitbit was diving headfirst into smartwatch waters may have been cheered. When the company made a point of explaining that it was getting into the smartwatch game and taking dead-aim at Apple Inc. (NASDAQ:AAPL), though, FIT investors jeered the idea, sending the stock lower by more than 18%.
The device is called a Blaze. It’s something in between the company’s well known fitness-tracking device and the Apple smartwatch. By focusing on being something in the middle, however, many observers fear the Blaze won’t serve either side of the smartwatch market all that well.
As The Verge‘s Lauren Goode explained:
“I can’t see this being embraced as a super stylish watch, and without GPS (or being waterproof), it’s not something that’s going to appeal to the hardcore fitness crowd, like the Fitbit Surge.”
Investors seem to agree.
General Motors Company (GM)
For the record, Ford Motor Company (NYSE:F) lost almost as much as General Motors did today. Which of them logged the biggest loss, though, is irrelevant. The crux of the story is the reason for the setback, and the irony behind it.
Most plausibly, GM and F lost roughly 8% and 2%, respectively, of their value today after Jim Cramer floated the possibility that auto sales in the U.S. may have actually reached their cyclical peak. Fearing he made a good point, investors were quick to shed shares of both automakers.
The irony: 2015 was a record-breaking year for auto sales in the United States. Already well above the average pace on a year-to-date basis, December’s ultra-strong sales month was in a position to put an exclamation point on the big year for GM and Ford.
Pandora Media Inc. (P)
Last but not least, Pandora Media shares lost another 5.6% today as a follow-on to Monday’s 8% setback… a pullback mostly spurred by a recent Barron’s article from this past weekend pointing out that Pandora is too much like broadcast radio compared to newly-introduced alternatives that allow listeners to select specific songs.
The bearish flames were further fanned after SunTrust analyst Robert Peck lowered his opinion on Pandora from a buy to neutral, and correspondingly lowered his target price on P stock from $18 to $15. Peck’s primary concern was rising costs incurred by management’s efforts to expand overseas and become more competitive at home.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
