With no missiles flying from, or bombs being dropped in, North Korea this weekend, traders were ready to start the new week with a bullish mindset that didn’t include any of last week’s bearish worries. By the time the closing bell rang, the S&P 500 Index was up 1% to end the session at 2,465.84. No new high was hit, but stocks are back within sight of them.
That’s not the case with every name though. Tenet Healthcare Corp (NYSE:THC), JD.Com Inc (ADR) (NASDAQ:JD) and Herbalife Ltd. (NYSE:HLF) were all running in the other direction, with all three of them simply extending downtrends that were already in place.
Here’s the deal.
Herbalife Ltd. (HLF)
Don’t look for a specific news-based reason shares of the nutrition and supplement company fell 5.2% on Monday — you won’t find it. Rather, look back at the weakness HLF has demonstrated since the middle of July to get a grip on this bearish undertow. HLF had already peeled back to the tune of 10% since then; the bulls just finally recognized they were fighting a losing battle.
That being said, there was and still is some underlying news for the accelerating weakness we’re seeing from HLF shares. Its second-quarter earnings report raised more questions than it answered after sales by volume fell 8%. A restructuring of the company’s business model got most of the blame for the lull, but investors are increasingly wondering if the new model is ultimately going to fail.
JD.Com Inc(ADR) (JD)
The good news is, China’s e-commerce powerhouse JD.Com has more than proven it can grow its top line, reporting a 44% year-over-year improvement in its second-quarter sales, decisively beating estimates to boot. The bad news is, JD.Com had to spend very heavily to drive that sales growth, pulling the company deeper into the red. The company lost $74.4 million last quarter versus a loss of only $38.8 million in the same quarter a year earlier due to higher marketing costs.
CFO Sidney Huang cautioned JD shareholders in May that it was likely to happen, but there was just something about seeing it in print that sent the stock 3.6% lower after the fact on Monday.
Tenet Healthcare Corp (THC)
Finally, much like HLF, the bulk of the reason Tenet Healthcare lost 7.3% of its value today is rooted in the downtrend it has logged since peaking in July. It just got the nudge it needed on Monday.
The implosion started in earnest last Tuesday, when Tenet Healthcare reported a second-quarter loss that was even bigger than expected. The pros were calling for a loss of 17 cents per share of THC stock, but the company booked a loss of 55 cents, exceeding the year-ago loss of 46 cents per share. Sales also came up short of expectations.
The market had almost let it go, allowing THC shares to stabilize as the week came to a close. But, an updated look at THC from market data organization Markit painted a picture of the stock that ultimately acted as a downgrade of the stock. Specifically, short interest in THC as well as the stock’s money-flow levels now imply the stock is taking on water faster than can be bailed out.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.