This past week was another of serious recovery for the broad stock market. The S&P 500 rallied some 4.1% during the week and ended up a sharp 7.9% from the lows put in during the selling madness of the prior week. Meanwhile, the Dow Jones Industrial Average (DJIA) ended up 2.6% on the week and was 6% higher than the selling climax lows of the prior week. All that considered, earnings season has not exactly been a boom for all major companies. Some of them had news out that very likely changed their fortunes for the worse — perhaps much, much worse.
24/7 Wall St. has tracked eight stocks that may have literally destroyed the near-term future for their stocks and for their investors. These companies may have hurt their stocks so badly that investors may simply ignore and avoid these stocks for longer than just the rest of 2014. Most of the bad news came from earnings. After all, during earnings season that is often all you hear about. Still, the damage has been done.
The good news is that almost all companies can recover in time. The bad news is that most companies take a series of quarters to remedy their woes. Some even take longer than that. Some of these stocks may recover much faster than others. It really just depends on which companies and management teams are able and willing to change their stripes.
24/7 Wall St. has made a summary of the news, referenced the larger story at the time, included analyst commentary or outside views, and added color when applicable. These are the eight stocks that destroyed their near-term future for investors. We have even included a chart montage as well.
Amazon.com Inc. (NASDAQ: AMZN) took the cake with an 8.3% loss to $287.07 on Friday. The stock hit a 52-week low of $284 after the online seller of everything reported earnings on Thursday of -$0.95 per share and $20.58 billion in revenue, against Thomson Reuters consensus estimates of -$0.74 in earnings per share and $20.84 in revenue. Jeff Bezos then gave fourth-quarter guidance of loss of $570 million to earnings of $430 million, as well as $27.3 billion to $30.3 billion in revenue. That compared to consensus estimates of $0.67 in earnings per share and $30.89 billion in revenue.
Investors were not happy with the loss that Amazon took for the quarter, and the notion that the key and critical fourth quarter looks bad too — and the company had negative margins. Bezos has been treating Amazon like a charitable institution rather than a business and playing a game of chicken with investors and valuations for too long. This company is now about 20 years old and has been public since the 1990s. With a $130 billion valuation, it cannot keep trading with loss valuations and being valued at “more than 150-times next year’s earnings” forever.
Amazon investors have realized that Bezos is Walmarting businesses and that should not keep losing money to be disruptive, nor keep chasing money-losing ideas just to develop a footing in a new area. A new class of investors will demand more ahead. Analysts maintained mostly positive ratings, but they slashed price targets handily on Friday — if this continues, they will do worse than just lower their price targets.