Volatility, You're Back! Home Depot, Netflix, and Vringo, Inc. Slide

The stock market is -- with the exception of quantum particle interactions and makeshift chemistry labs -- one of the most notoriously volatile things in the known universe. In the last week, however, major market indices have been humming along smoothly, logging a small loss here, a modest gain there. In fact, the first third of 2014 has taken investors on a rather dull, calm ride -- and it isn't just the stock market. Stocks, bonds, and currencies, through the end of April, are each experiencing a dearth of volatility not seen in the prior five years. But such a smooth journey can't go on forever, and stocks showed their penchant for big swings once again on Tuesday as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) tumbled 129 points, or 0.8%, to end at 16,401. 

Home Depot (NYSE: HD  ) helped propel the Dow lower -- Tuesday was its first triple-digit move in more than a week -- as shares shed 1.6% in trading. Today's stumble was hastened by new data, which reveal that home prices aren't rising as rapidly as investors had hoped, a softness in the real estate market that could dent Home Depot's business if the trend continues. CoreLogic's Home Price Index advanced at an 11.1% year-over-year pace in March, more than 1% shy of February's 12.2% annual gains. Considering how harsh this winter was, it's especially disappointing that prices didn't jump a little higher when March rolled around.

Vringo (NASDAQ: VRNG  ) shareholders can identify with being "especially disappointed" today, as the stock tumbled 9.2% in trading. Vringo is an unusual stock because the underlying company doesn't rely on that old-fashioned business model of providing goods and services to earn its keep. Put simply, Vringo is what some people might term a "patent troll." Vringo "is engaged in the innovation, development and monetization of intellectual property and mobile technologies," a strategy that boils down to acquiring intellectual property and then either licensing it out or suing the pants off anyone that infringes upon it. A 2012 ruling against Google for $30.5 million is now being challenged by the search giant, in a move that puts a serious damper on Vringo's prospects. Vringo has less than $3 million in revenue in its last five fiscal years combined. 

"Orange is the New Black" returns on June 6. Source: Netflix

Lastly, shares of Netflix (NASDAQ: NFLX  ) tumbled 5.3% on Tuesday, as a number of high-growth stocks fizzled out. While fans of Netflix's hit original series "Orange is the New Black," can rejoice upon hearing that the show's already been greenlit for a third season, major concerns still loom surrounding the company's business model. Netflix shelled out an undisclosed sum to Internet service provider Comcast earlier this year to ensure that its video content would reach subscribers without a hitch. The agreement was a blow to the ideal of net neutrality -- in which all Internet traffic is treated equally by broadband providers -- and could set a costly precedent for Netflix down the line.

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  • Report this Comment On May 06, 2014, at 10:02 PM, stockined wrote:

    I still can't figure out why Vringo fell so sharply today, its not like no one knew that google was going to try and appeal. And ringo fell even before the hearing started. Everyone knew that google was going to try and appeal. And Vringo's lawyer handled himself very well

  • Report this Comment On May 07, 2014, at 8:07 AM, Innovator13 wrote:

    Vringo is not a patent troll because it was Lang's patent that Google infringed upon by using it to make millions without paying for utilizing it. Google lost the patent infringement case by jury trial 10-0! Google has no respect for the decision, they challenged the two patents and the USPTO ruled the patents were valid. Google will attempt to bankrupt Vringo by filing appeal after appeal, each one without merit. It is only by the courts, that small companies like Vringo can remain viable

    Why doesn't Motley Fool stop being beholden to "Googliath" and at least call it as it is?

  • Report this Comment On May 12, 2014, at 7:18 PM, Hansen wrote:

    The number of unique visits on Netflix’s website has continued to increase since fourth quarter fiscal year 2013, but the increase has only been recorded by 14% year over year, compared to growth of 22% in November 2013

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Related Tickers

8/28/2015 4:55 PM
^DJI $16643.01 Down -11.76 -0.07%
HD $117.52 Down -0.14 -0.12%
Home Depot CAPS Rating: ****
NFLX $117.63 Down -0.03 -0.03%
Netflix CAPS Rating: ***
VRNG $0.59 Down -0.02 -3.36%
Vringo, Inc. CAPS Rating: *