The market managed to get the new trading week started on the right foot. The S&P 500 ended the day at 2151.33, up 0.47%. More important, that advance tore into a thick layer of resistance that up until this point was troublesome for stocks. It remains to be seen if the bulls will be able to follow-through; so far they haven’t. It’s a start though.
Not every name jumped on board Monday’s bullish train though. GoPro Inc (NASDAQ:GPRO), Time Warner Inc (NYSE:TWX) and TD Ameritrade Holding Corp. (NASDAQ:AMTD) each lost more than a small amount of ground on Monday.
Here’s why.
TD Ameritrade Holding Corp. (AMTD)
On Monday, online brokerage firm TD Ameritrade Holding announced it would be acquiring privately held Scottrade for a deal that values the bank/broker at $4 billion. Although TD Ameritrade Holding is considerably bigger than Scottrade, the purchase vastly expands the buying company’s branch network.
AMTD shareholders initially cheered the news, sending shares higher in pre-market trading this morning. And well they should. TD Ameritrade Holding is no stranger to integrations, and this one is expected to save $450 million per year once all synergies are realized.
Having had some time to think it over though, traders sent AMTD shares to a loss of 4.3% of Monday when it became clear this merger would likely face a great deal of antitrust scrutiny. The brokerage firm may end up spending a lot of time and money for nothing.
Time Warner Inc (TWX)
TD Ameritrade Holding wasn’t the only name to get hit hard following news that an acquisition was in the works. Entertainment giant Time Warner — soon to be acquired by AT&T Inc. (NYSE:T) — fell 3.0% on Monday following confirmation that the telecom player was indeed pulling the trigger on the rumored deal. The final price tag/offer will total $85 billion.
Problem: TWX had already gained 13% since last Wednesday, shortly before the rumor first surfaced. The value of the then-impending deal didn’t quite justify the price TWX had reached. Now reality is setting in.
Bolstering the headwind is the lack of likelihood a bidding war would start and propel TWX shares even higher. Aside from the fact that Time Warner shares are already trading at hefty premium following the announcements, there’s a $1.7 billion breakup fee in place.
GoPro Inc (GPRO)
Last but not least, just when it looked like GoPro might be on the mend, a string of disappointing headlines that have been taking shape since last week finally came to a head today, materializing in the form of a decidedly bearish assessment from research outfit Longbow.
In short, Longbow fears the action camera maker has already demonstrated delivery bottlenecks, including postponing the launch date of the ballyhooed Karma drone until late November. Longbow thinks that delay could mean Q4’s existing guidance is too optimistic.
That said, it’s not as if GPRO wasn’t an easy target. Late last week, the Hero 5 camera was no longer available through Amazon.com, Inc. (NASDAQ:AMZN), and another rival drone was unveiled just a couple days before the Amazon decision was made. The distinguishing factor? That drone comes with a camera and doesn’t have to be registered with the FAA. The Karma doesn’t include a camera and must be registered with the country’s aviation authority.
GPRO lost 7.0% of its value on Monday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
