Last Week's 3 Big Dow Losers

An in-depth look at what caused a few stocks to fall.

Apr 5, 2014 at 5:00PM
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Each week some of the Dow Jones Industrial Average (DJINDICES:^DJI) stocks rise while others fall. Understanding what caused the biggest moves can help investors understand not only why those big percentage movers changed, but also what could cause other stocks to move in the future.

Before we look at the Dow's three largest percentage losers this past week, let's see how the Dow and the other major U.S. indexes performed this past week. The Dow was the big winner of the three, gaining 89 points, or 0.54%, while the S&P 500 increased 0.4% and the Nasdaq lost 0.67% after declining 2.6% on Friday alone.

Now let's get to the top three Dow losers of the week. Coming in third, American Express (NYSE:AXP) lost 1.42%. There was little negative news about the stock this past week, but it did go ex-dividend on Wednesday, which lowered the share price by $0.23. That isn't a large reduction, but it may be a big deal for the company. American Express' dividend yield is just 1% and a payout ratio of only 18%, and having the stock go ex-dividend may have been a reminder to some shareholders that American Express doesn't reward patient investors. Its yield is one of the lowest on the Dow, and with American Express' stable and reliable business model, the company can certainly afford to give a little more back to shareholders.

The second biggest Dow loser of the week was Coca-Cola (NYSE:KO), down 1.87%. The world's largest beverage company has been feeling some pressure lately, as an activist investor attempts to rally shareholders to block Coke's 2014 equity plan. Under the plan, 6,400 employees will be able to get shares of the company, either in option grants or equity awards, as a form of payment for hitting certain goals. Activist investor David Winters believes the plan will end up costing the company upwards of $24 billion and says that isn't in shareholders' best interests. On the other side, Coke thinks the plan will help make the employees feel more like owners and thus work harder to increase their holdings. To read a deeper analysis of the issue, click here.

This is a difficult issue at Coke, and we can't blame investors who just want out of this fight. The reality is that there may not be any ultimate winner, regardless of what happens. If shareholders get their way, the management team may feel undervalued and jump ship. If management gets its way, billions of dollars' worth of shareholder value may be destroyed, which could cause the stock to fall lower than it is now. As a shareholder, I'm going to stick around and see what happens, but I'm not too optimistic about the outcome.  


Finally, we come to Visa (NYSE:V), whose 2.07% drop made it the Dow's worst performer for two weeks in a row, and Wal-Mart (NYSE:WMT) takes at least part of the blame in both cases. Two weeks ago, the credit card company got hit by a $5 billion lawsuit over swipe fees, and on Friday the world's largest retailer announced it had chosen MasterCard to replace Discover for the company's branded credit cards. Having the Wal-Mart account would essentially guarantee millions in revenue every year. So while this news doesn't materially hurt Visa, it does represent a massive missed opportunity.  

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Matt Thalman owns shares of Coca-Cola. The Motley Fool recommends American Express, Coca-Cola, and Visa, owns shares of Coca-Cola and Visa, and has options on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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