The major market benchmarks never broke into positive territory on Monday, and by the closing bell the Dow Jones Industrial Average (^DJI -0.98%) and the S&P 500 (^GSPC -0.46%) indexes had each shed less than 0.5%.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
(0.24%) |
(51.37) |
|
S&P 500 |
(0.33%) |
(7.81) |
Data source: Yahoo! Finance.
Investors making leveraged bullish bets on gold were crushed as the Direxion Daily Gold Miners Bull 3X ETF (NUGT 7.23%) and the Daily Jr Gold Miners Bull 3X ETF (JNUG 4.72%) dove 7% and 17%, respectively. Both funds are down sharply over the past month even though gold prices have ticked just slightly lower over that time.
Image source: Getty Images.
Meanwhile, GoPro (GPRO -3.39%) and Netflix (NFLX 1.74%) were two of the biggest individual stock movers on the day.
GoPro bears pile on
Shares of GoPro fell nearly 8% after analysts at Goldman Sachs reduced their price target to $6 per share while downgrading the action-camera specialist to a sell ranking from hold. The company faces core challenges to its operations ahead, analyst Simona Jankowski argued. A buildup of inventory following a brutal holiday season sales quarter is only the most immediate of these hurdles.
GoPro also has to deal with new competitors in its core camera segment and in the drone segment on which it has pinned much of its growth hopes. In most cases, these rivals boast innovative products at lower price points, which should only accelerate the falling profit margin trends in the industry. GoPro's restructuring plan, meanwhile, won't be enough to push the company back into positive free cash flow until at least the fourth quarter of 2017, and so a dip into its credit facility may be in the cards. "We expect GoPro to continue to struggle fundamentally," Jankowski wrote in a research note.
Image source: GoPro.
Goldman Sachs is just the latest Wall Street firm to add their bearish take on a stock that has become a favorite for short-sellers. With nearly one-third of the float sold short, many investors are betting that things are bound to get worse for the once high-flying tech giant. It's an easy target, given that sales and profitability both collapsed last year despite management's best efforts to reposition its product line against the surging competition.
Netflix gets upgraded
Shares of streaming giant Netflix were one of the S&P 500's best performers today, rising 2% following a stock upgrade. Analysts at UBS said their research points to an upside surprise to the company's growth forecast that projects 5.2 million new subscribers in the first quarter of 2017.
CEO Reed Hastings and his team had cautioned investors to watch for slowing gains this quarter since management believes it pulled a big chunk member additions from this period into the blowout fourth quarter. Yet, citing app download data, the UBS analysts describe "improving momentum across many of Netflix's global markets" that might deliver a growth beat. More broadly, UBS believes Netflix should tack on an additional 20% to its subscriber base this year as global markets mature. That expected success underpins UBS' rationale for raising the price target on the stock to $175 and upgrading from neutral to buy.
Data source: Netflix financial filings. Chart by author.
Netflix is paying a steep price for its market-thumping membership gains. In fact, it should spend $8 billion on content, marketing, and product upgrades this year -- up from $6 billion in 2016. Still, while management has issued forecasting misses over the short term, they've been broadly correct about how the shift toward on-demand TV watching is a global phenomenon. Netflix added 19 million users last year, mostly from international markets, to mark solid acceleration over the prior year's gains of 17 million.
