Despite the bullish start on Tuesday, stocks didn’t end the session with nearly as much enthusiasm. By the time the closing bell rang, the S&P 500 had essentially given back all of its intraday gain, ending the day up 0.02% at 2,293.08.
It could have been worse though, and for owners of General Motors Company (NYSE:GM), Motorola Solutions Inc (NYSE:MSI) and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), it was worse. These names used more than their fair share of red ink today.
Here’s the deal.
Teva Pharmaceutical Industries Ltd (ADR) (TEVA)
After a few too many months of fiscal drama, Teva Pharmaceutical Industries CEO Erez Vigodman is stepping down.
Although it was hardly the only reason, a great deal of Vigodman’s exit stems from a $519 million settlement with the U.S. Securities and Exchange Commission related to bribes that ultimately resulted in increased sales. Several of the company’s recent acquisitions have also been unpopular with Teva shareholders, who are particularly uncertain if last year’s $40.5 billion purchase of Actavis’ generic business will pay off.
The final blow, though, may have been last month’s court decision that the company’s patent on multiple sclerosis drug Copaxone was no longer valid. Copaxone drives 20% of Teva Pharmaceutical’s sales, and accounts for 40% of its net income.
Although Vigodman’s exit may be the beginning of better days, investors are concerned that it’s another disruption at an inopportune time. TEVA ended the day down 6.3%.
Motorola Solutions Inc (MSI)
Citron Research’s Andrew Left is at it again, this time taking aim at telecom technology company Motorola Solutions. His accusation got some traction too, judging from the 5.4% pullback MSI shares suffered on Tuesday.
Andrew Left is a well-known and well-publicized short seller, often taking positions that will gain in value should that stock fall, and then touting reasons why that stock is arguably overvalued.
The chief of Citron Research is also frequently right; he accurately spotted problems with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Ambarella Inc (NASDAQ:AMBA), just to name a couple. Now he’s got Motorola Solutions in his crosshairs, claiming “While Motorola has many operating divisions, the bulk of its profits come from selling overpriced handsets into its single-source contracts in the U.S.” Presumably, the government will dig into the matter. If it finds Left is … well, right, then it could end up hurting revenue and earnings.
General Motors Company (GM)
Last but not least, carmaker General Motors reported disappointing fourth-quarter numbers on Tuesday morning.
Actually, earnings were better than expected. The pros were calling for a profit of $1.17 per share, and the company reported income of $1.28 per share. Sales of $44 billion handily topped estimates of only $40 billion.
The spark for the 4.7% selloff GM dished out today was shrinking profit margins, particularly in North America. That region’s margins fell from 10% a year ago to 8.4% this time around, perhaps reflecting greater reliance on buyers’ incentives that have been edging higher for several months now.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.