Market Today: Farfetch Plummets Amid Financial Struggles and Credit Downgrades
The fashion retail platform Farfetch Limited (NYSE:FTCH) experienced a staggering 37% drop in its stock value in late trading on Monday, hitting a record low of $0.76. The company has been under intense selling pressure since late November following the announcement by Richemont (CFRHF) that it had no intentions to invest in or loan money to Farfetch. Compounding the issue, Farfetch delayed its Q3 earnings report and related conference call. The company's financial challenges were further highlighted by two credit downgrades earlier this month and reports of a potential sale of Browns, a subsidiary, as Farfetch seeks to raise funds. The Seeking Alpha Quant Rating has classified Farfetch as a Strong Sell or Sell since late August, predating the stock's dramatic decline. Short interest in Farfetch remains substantial.
Walgreens Boots Alliance (NASDAQ:WBA) saw an end to three consecutive sessions of gains after Moody's Investors Service downgraded the company's senior unsecured ratings to Ba2, which is considered non-investment grade. The downgrade reflects concerns over Walgreens' high financial leverage, poor interest coverage, and weak free cash flow, which are expected to persist for 12 to 18 months. The downgrade also underscores the challenges Walgreens faces as it implements new initiatives to address significant operating losses and achieve profitability in its U.S. healthcare segment. The company's debt/EBITDA ratio increased despite repaying $2.6 billion in debt during FY23.
Chevron (NYSE:CVX) CEO Mike Wirth reassured stakeholders that the border dispute between Venezuela and Guyana is unlikely to escalate into a military conflict. Wirth emphasized that such disputes are typically resolved through negotiation and compromise. Chevron, which has operations in Venezuela, is closely monitoring the situation, especially since it is set to acquire a 30% stake in Guyana's offshore oil development through its $53 billion acquisition of Hess (HES).
MasterCard (NYSE:MA) released its Economic 2024 Outlook report, indicating robust consumer spending supported by a strong labor market. Mastercard Economics Institute's chief economist, Michelle Meyer, highlighted that wage growth continues to outpace price inflation, suggesting that consumers have greater purchasing power. The report identified movies, property, travel, and sports as the strongest spending categories in 2023.
Goldman Sachs, in its U.S. Weekly Kickstart report, suggested that growth stocks should outperform value stocks if economic growth remains modest and interest rates do not rise significantly. The report highlighted that the Russell 1000 Growth (IWF) has outperformed the Russell 1000 Value (IWD) by a significant margin, driven partly by the strong performance of tech stocks, which comprise a large portion of the growth index.
Nvidia (NASDAQ:NVDA) received support from the U.S. Department of Commerce, with Secretary Gina Raimondo stating that the company "can, will and should sell AI chips to China" for commercial purposes. This statement comes amid discussions with Nvidia about AI chip sales to China, following updated export restrictions aimed at limiting the country's access to advanced technology.
Eli Lilly (NYSE:LLY) shares experienced a downturn after a study published in The Journal of the American Medical Association showed that patients regained weight after discontinuing the company's obesity drug, tirzepatide. The study, which was sponsored by Eli Lilly, revealed that patients who switched to a placebo after the treatment period gained back a significant amount of weight, while those who continued the therapy saw additional weight loss.
Microsoft (NASDAQ:MSFT) CEO Satya Nadella has kept the company in the spotlight with its stake in OpenAI and the pending acquisition of Activision Blizzard. Despite job cuts and valuation concerns, Microsoft's investment in generative AI is seen as a key driver for the future. The stock has seen a significant increase in 2023, although it fell slightly on Monday.
CRISPR Therapeutics (NASDAQ:CRSP) saw its rating downgraded by TD Cowen to underperform due to concerns over the valuation and the market uptake of its sickle cell disease treatment, Casgevy. The investment bank expressed skepticism about the treatment's competitive edge against bluebird bio's (BLUE) Lyfgenia and the overall patient demand for such treatments.
Trimble Inc. (NASDAQ:TRMB) shares rose after activist investor Jana Partners (Trades, Portfolio) highlighted the company's potential at a conference. Jana Partners (Trades, Portfolio) believes Trimble has significant upside and advocates for a focus on organic growth rather than large acquisitions. The investor also suggested that Trimble could be an attractive takeover target for larger industrial companies.
Amazon (AMZN) and Google (GOOG, GOOGL) are projected by Goldman Sachs to be major winners in the coming years, with AI and the convergence of business models in media, advertising, and e-commerce playing pivotal roles. The rise of generative AI is seen as a potentially disruptive computing paradigm with significant investment potential.
Illumina (ILMN) announced its intention to divest its GRAIL unit, following a European Commission order against its acquisition. The company filed a draft registration statement with the SEC as it evaluates its options for divestiture, pending the outcome of legal challenges against the European Commission's decision.
Terran Orbital (LLAP) shares plummeted following reports that the satellite maker is seeking bids for a potential sale. The company has attracted interest from strategic and private equity buyers, and Lockheed Martin (LMT), which holds a significant stake in Terran Orbital, is not expected to bid.
Stock futures were mixed as investors awaited the outcome of the Federal Reserve's final meeting of the year. Cigna (CI) shares surged after calling off a merger with Humana (HUM), while Macy's (M) shares jumped following a significant buyback announcement.
Loop Media (LPTV), Sirius XM Holdings (SIRI), and Emerald Holding (EEX) were among the biggest stock gainers, while Anghami (ANGH) and MoneyHero (MNY) were among the largest losers. The S&P 500 Communication Services Sector saw a slight decline.
Citi placed Nvidia (NASDAQ:NVDA) on a 30-day catalyst watch, anticipating potential positive developments from the upcoming CES trade show and Nvidia's CEO's "Special Address."
Metalla Royalty and Streaming (MTA) and Green Plains (GPRE) were among the gainers in the Materials Sector, while Hongli Group (HLP) and Ramaco Resources (METCB) were among the losers.
This article first appeared on GuruFocus.
