After three weeks of post-election gains and a Thanksgiving week that ended on a high note (not to mention on record highs), traders had a measurable change of heart on Monday. The S&P 500 ended the first day of the new trading week at 2,201.72, down 0.53%.
Here’s a closer look at what upended each one.
Palo Alto Networks Inc (PANW)
The bad news for cybersecurity name Palo Alto Networks was actually posted last week, and PANW shareholders paid the price for it then. Given that it was a holiday week and some traders weren’t looking too closely at the time though, investors punished PANW stock again on Monday.
The misstep was last quarter’s results. Earnings of 55 cents per share were better than the 53 cents per share pros were expecting, but revenue of $398.1 million missed estimates of $400 million. Sales guidance of between $426 million and $432 million for the current quarter represents year-over-year growth of between 27% and 29%, which is strong, but less than the +30% Palo Alto shareholders have grown accustomed to.
Having had a weekend to think about it, traders sent PANW another 3.7% lower. Shares are now down 15% post-earnings.
H & R Block Inc (HRB)
Simplification of the United States tax code was always one of Donald Trump’s lesser-touted campaign initiatives, and even since he was elected and started naming cabinet members, it has not been a hot button. Beginning last week though, the matter was reprised as something of a certainty … and that’s bad for tax preparer H & R Block, which relies on the code’s complexity to funnel frustrated taxpayers to its services.
The likelihood of a major tax code overhaul was enough to prompt a downgrade of HRB from BTIG’s Mark Palmer. He lowered the firm’s official stance on the stock from “Neutral” to “Sell,” explaining:
“… we believe the ‘Better Way for Tax Reform’ unveiled by Republicans on the House Ways and Means Committee last June represents a threat to HRB’s business insofar as it includes a proposal for the complex tax forms currently in use to be replaced with a postcard that has just 14 lines to fill out.”
HRB ended the day down 9%.
Trina Solar Limited (ADR) (TSL)
Last but not least, like Palo Alto Networks, Trina Solar Limited unveiled bad news last week, and like PANW, TSL paid the price for disappointing quarterly results again today, after getting hit hard on Friday of last week.
As was the case with Palo Alto, earnings were fine — the China-based solar panel maker reported a Q3 operating profit of 18 cents per share of TSL, topping estimates for 16 cents. But, revenue of $741.1 million fell well short of the $834.5 million the pros were calling for.
Today’s 8.3% plunge from the stock paired with Friday’s big setback translates into a loss of more than 11% for the two-day stretch.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.