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Why Chesapeake Energy, Endeavour Silver, and Shopify Slumped Today

By Dan Caplinger - Oct 10, 2017 at 4:30PM

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Even on a solid day for the market, these stocks fell sharply. Find out why.

Tuesday was a quiet but solid day for the stock market, with most major benchmarks easing minimally higher. Investors continued to balance the favorable performance of the overall U.S. economy and many individual companies against the uncertainties in the realms of Washington politics and global monetary policy going forward. Despite good news from some high-profile companies, several well-known individual names saw substantial declines. Chesapeake Energy (CHKA.Q), Endeavour Silver (EXK -0.55%), and Shopify (SHOP 10.50%) 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.

Chesapeake looks tired despite rising oil prices

Shares of Chesapeake Energy lost over 6.5% even though the day was a generally positive one for energy companies more broadly. Oil prices surged by more than $1 per barrel, approaching the $51 mark. Yet analysts at Jefferies singled out Chesapeake as an underperformer in the energy industry, cutting their rating on the stock from hold to underperform and setting a $2 price target. Jefferies cited high fixed costs and less favorable assets than some of its peers in setting a target that's almost 50% below where Chesapeake now trades even after today's losses, and the energy company will have to respond with aggressive strategic moves in order to prove the analyst firm wrong.

Engineers looking at a geology chart of an energy play.

Image source: Chesapeake Energy.

Endeavour shines a little less brightly

Endeavour Silver stock dropped 5% after the company reported third-quarter production results. Even though silver prices moved higher by about 1% on Tuesday, investors reacted negatively to news that silver production fell 2% and gold production fell 5% compared to year-earlier results. CEO Bradford Cooke reported mixed results at the company's mining assets, with some mines enjoying better operating results while others faced challenges that held back production levels. With throughput having fallen by 12% during the quarter, Endeavour was fortunate to be able to keep production declines as small as it did. Nevertheless, investors want Endeavour to show signs of bouncing back from poor performance in recent quarters.

Shopify keeps losing ground

Finally, shares of Shopify declined 5%. The e-commerce facilitator continued its descent following last week's negative comments from short-selling analyst Andrew Left of Citron Research, who alleged that Shopify's business model is flawed and the company might have violated guidelines from the Federal Trade Commission. Many investors still see plenty of upside for Shopify, citing the success that the company has had in building up its network of vendor clients. It's not unusual for high-flying stocks like Spotify to draw criticism from various corners, but investors are right to demand answers to tough questions before they feel entirely comfortable with further investments.

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

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Stocks Mentioned

Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
Endeavour Silver Corp. Stock Quote
Endeavour Silver Corp.
$3.59 (-0.55%) $0.02
Shopify Inc. Stock Quote
Shopify Inc.
$40.61 (10.50%) $3.86

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