Once again, failing to find new reasons to continue buying, the market just drifted sideways on Thursday. By the time the closing bell rang, the S&P 500 had slipped a mere 0.2%, ending the session at 2180.30 … right on the 20-day moving average line, and right in the middle of its recent trading range.
The selling effort wasn’t so modest for Hewlett Packard Enterprise Co (NYSE:HPE), Twitter Inc (NYSE:TWTR) and Tractor Supply Company (NASDAQ:TSCO) though.
Here’s why each of them lost so much more ground than the market did.
Tractor Supply Company (TSCO)
To say garden and farm supply retailer Tractor Supply Company worried investors would be an understatement. The company outright terrified investors. TSCO ended the day down 17% … the worst single-day in over a decade.
The spark for the setback was lowered guidance. Tractor Supply now anticipates earnings between $3.22 and $3.26 per share this fiscal year, versus the average analyst estimate of $3.38 per share of TSCO. Weak sales in areas hit hardest by crude oil’s contraction were the core of the reason for the dialed-back outlook.
Fanning the bearish flames that scorched TSCO on Thursday was a trio of downgrades. Wedbush and Credit Suisse lowered their opinions on the company, as did Deutsche Bank. All three suggested there may have been more to Tractor Supply Company’s problems than just a little bad luck or unfortunate timing.
Twitter Inc (TWTR)
In some circumstances it may be hailed as a positive development. For a long-beleaguered Twitter though, new cost cut plans are being viewed as an indication of weakness … more of a “have to” than a “can do.”
TWTR lost nearly 6% of its value on Thursday after announcing it was exploring ways to curb spending, up to and including layoffs. Although the idea was actually floated a couple days ago in front of today’s board meeting, CNBC reiterated the notion when Aditi Roy commented that “management is exploring ways to cut costs, including possible layoffs.” Adding layoffs to the list of possibilities got the market’s attention, in that it’s only a serious step, but runs the risk of Twitter undercutting its ability to function as well as it needs to.
Hewlett Packard Enterprise Co (HPE)
Last but not least, Hewlett Packard Enterprise posted lackluster third-quarter results this morning, sending HPE shares 3.2% lower in response.
Last quarter, Hewlett Packard Enterprise earned 49 cents per share on revenue of $12.21 billion. The bottom line topped last year’s earnings of 47 cents per share of HPE, but the top line missed outlooks of $12.59 billion. Sales were down 6.5% on a year-over-year basis. Earnings met expectations. The market was hoping for a little more evidence of strength.
Part of the stock’s setback may have also been fueled by the company’s decision to shed part of its software business to Micro Focus, collecting $8.8 billion in the process. While it’s arguably the smart move for the long haul, HPE investors may be concerned the company is being forced to shrink its way to success rather than grow revenue with the assets it has.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
