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Why MercadoLibre, Electronic Arts, and Cronos Group Slumped Today

Dan Caplinger, The Motley Fool

Thursday was a relatively quiet day on Wall Street, with most stock market benchmarks giving up a modest amount of ground following their recent record runs. Trade tensions are still making some investors nervous, especially as new negotiations with China are expected to begin and discussions with Canada to create a new trade agreement among the three major countries in North America remain ongoing. Moreover, some individual stocks came under pressure due to company-specific factors. MercadoLibre (NASDAQ: MELI), Electronic Arts (NASDAQ: EA), and Cronos Group (NASDAQ: CRON) were among the worst performers. Here's why they did so poorly.

Argentina's woes worry MercadoLibre investors

Shares of MercadoLibre dropped 10% as investors reacted negatively to recent events in Argentina, which is one of the Latin American e-commerce specialist's most important markets. The country has gone through a number of macroeconomic challenges lately, including an attack on its currency that has led its central bank to boost interest rates to 60%. Argentina is also looking for help from the International Monetary Fund to defend the Argentine peso, but many fear that the crisis could prompt a loss of consumer confidence that in turn could disrupt e-commerce at least temporarily. That would be negative for MercadoLibre in the short run, although some point to products like the MercadoPago payment service as potentially serving a useful role in helping Argentinian consumers make money transfers at a difficult time for the nation's economy.

Person in yellow and green clothing talking to staff person at MercadoLibre register.

Image source: MercadoLibre.

A delay hurts EA

Electronic Arts stock fell 10% after the company announced that it would delay the release of its much-anticipated Battlefield V video game. EA will now make the game available beginning on Nov. 20, and that forced the company to make adjustments to its full-year guidance in order to reflect the shortened period during which sales of the latest Battlefield installment could take place. Specifically, EA reduced its net bookings guidance by $350 million and now expects $5.2 billion for the fiscal year ending in March 2019. With some concerns already having swirled about the potential success of the franchise, today's news only heightened fears that EA might not be able to keep up with fast-moving competitors in a tough market.

Cronos gets Citroned

Finally, shares of Cronos Group plunged nearly 29%. The Canadian cannabis specialist became the latest target of short-selling investor Andrew Left at Citron Research, who published a negative review of the company. Setting a price target of just $3.50 per share, Left argued that Cronos is just one player among dozens of marijuana production companies in Canada, and he also called into question exactly how large Cronos' supply agreements with key provincial distributors will be. Immense speculation has lifted Cronos considerably, and even with today's drop, the stock is still up by more than 50% over just the past two weeks.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends MercadoLibre. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.