Please ensure Javascript is enabled for purposes of website accessibility

Why Advanced Micro Devices, Alaska Air Group, and Dr Pepper Snapple Group Slumped Today

By Dan Caplinger - Oct 25, 2017 at 4:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These stocks helped lead the market lower. Find out why.

Wall Street finished down on Wednesday, and triple-digit losses for the Dow led major benchmarks lower by about half a percent. Earnings season continued to dominate the headlines, but some market participants are more nervous about broader-based macroeconomic calls suggesting that the 8-year-old bull market might finally be starting to run out of steam. Even some companies that posted relatively good earnings results lost ground, as their performance wasn't quite as good as investors had wanted to see. Moreover, some less-than-stellar news also weighed on certain individual stocks. Advanced Micro Devices (AMD -0.64%), Alaska Air Group (ALK -1.28%), and Dr Pepper Snapple Group (DPS) 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.

AMD takes a hit despite solid results

Shares of Advanced Micro Devices dropped 13.5% even though the chipmaker reported good financial results in its third-quarter report and pushed its guidance for the rest of the year higher as well. Sales were up by more than a quarter on strength from new product launches and a big acceleration in demand for graphics processing units due to soaring cryptocurrency prices. However, one piece of bad news came from the enterprise segment, where operating income fell by nearly two-fifths from year-ago results. Still, most of those following the stock attributed the share price decline to outsized expectations, and given just how far AMD had soared recently, it's not surprising to see some investors conclude that the stock had gotten ahead of itself.

Box containing AMD Ryzen chip against an orange background.

Image source: AMD.

Alaska Air stalls

Alaska Air Group stock lost altitude, falling 13% in the wake of the company's third-quarter financial report. Adjusted net income was up just 2% from year-ago levels, and revenue soared by more than a third thanks largely to the acquisition of Virgin America earlier this year. Yet key metrics fell, including a 4% drop in passenger revenue per available seat mile and a decline in load factors, and the cost of fuel climbed by nearly a seventh from where it was a year ago. With competitors starting to attack some of the routes that Alaska has sought to dominate, shareholders are looking more carefully to see whether Alaska Air's competitive advantages can hold.

Dr Pepper falls flat

Finally, shares of Dr Pepper Snapple Group finished 5% lower. The beverage company posted a 4% rise in sales during the third quarter, but the Texas-based Dr Pepper blamed the recent hurricanes as well as the earthquake near Mexico City for hurting its results during the period. Nevertheless, CEO Larry Young remained confident about Dr Pepper's prospects, pointing to the recent acquisition of Bai and its antioxidant drink line as well as the ongoing brand-building program that the company has implemented. Competition in beverages is fierce, but Dr Pepper has a customer loyalty advantage that it hopes to use to build momentum going forward.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dr Pepper Snapple Group, Inc. Stock Quote
Dr Pepper Snapple Group, Inc.
DPS
Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
AMD
$77.49 (-0.64%) $0.50
Alaska Air Group, Inc. Stock Quote
Alaska Air Group, Inc.
ALK
$39.96 (-1.28%) $0.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.