The stock market fell sharply on Thursday, responding negatively to rising geopolitical tensions and a lack of confidence in the U.S. government's ability to follow through on promised policy initiatives. Major benchmarks finished down as much as 2.1%, with particular weakness in the technology sector. Energy prices slumped, with crude falling about $1 per barrel to drop below the $49 level, but gold and silver advanced on the rising perceived threat of potential military conflict between the U.S. and North Korea. Also hurting the market were poor performances from certain stocks, and Blue Apron Holdings (APRN), MercadoLibre (MELI -0.00%), and Chicago Bridge & Iron (CBI) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Blue Apron wilts
Shares of Blue Apron Holdings dropped almost 18% after the food delivery service reported its second-quarter results. Revenue rose modestly from year-ago levels, but the costs of meeting rising demand climbed at a far greater pace, hurting gross margin figures and leading to extreme boosts to operating costs overall. Investors were also displeased with the fact that customer counts declined sequentially compared to the first quarter of 2017, contributing to a drop in total orders processed. Even though Blue Apron successfully cut its spending on marketing, the company now believes that revenue will actually drop in the second half of the year. For a newly public stock counting on positive word of mouth, Blue Apron's story isn't working out the way bullish investors had hoped.
Image source: Blue Apron.
MercadoLibre gets a bad review
MercadoLibre stock fell 7.5%, dropping in sympathy with its Latin American stock peers but also continuing weakness in the wake of a stock analyst company's negative assessment of the Latin American e-commerce giant. Analysts at J.P. Morgan Securities cut their price target on MercadoLibre on Wednesday, reducing their previous target by $30 to $270 per share. Weaker margin figures in Brazil and poor performance in Mexico are likely to be the primary culprits, and MercadoLibre's efforts to woo customers with free shipping promotions could be costly in the short run. Given investors' negative reaction last week to solid financial performance in the second quarter, shareholders have to conclude that traders think that MercadoLibre stock has come too far too quickly.
Chicago Bridge halts its dividend
Finally, shares of Chicago Bridge & Iron plunged nearly 27%. The engineering and construction specialist released its second-quarter results, which included an immense drop in revenue and an unexpected loss. In addition, the company said that it would discontinue paying its dividend, which had carried a yield of almost 1.75% for the stock. The moves reflect extreme balance-sheet weakness, and the dividend cut was apparently necessary in order to satisfy creditors who were just as shocked as shareholders by the news. With falling guidance and the need for extreme strategic action, things look exceedingly uncertain for Chicago Bridge & Iron going forward.
