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Why Chesapeake Energy, Netgear, and Manhattan Associates Slumped Today

By Dan Caplinger - Feb 7, 2018 at 4:34PM

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Find out what happened in the energy markets and elsewhere to push these stocks down.

Wednesday was another topsy-turvy day on Wall Street, and major benchmarks saw big trading moves that sent the Dow up as much as 300 points and down more than 200 points during the session. The market isn't likely to provide any firm answers about whether the plunge earlier this week was the beginning of a correction or merely a regular minor pullback. Even with Tuesday's big bounce, investors remain uncertain about the future, and negative news from some individual stocks helped feed their fears. Chesapeake Energy (CHKA.Q), Netgear (NTGR -1.23%), and Manhattan Associates (MANH -2.08%) 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 deals with energy's declines

Shares of Chesapeake Energy dropped 8% on a poor day for the energy sector. Crude oil prices moved downward by almost $2 per barrel to fall below the $61.50 level, and natural gas prices were also weaker as the extreme cold weather seen earlier in the winter has started giving way to more normal conditions. Investors also aren't happy with the strategic moves that Chesapeake has had to make, including another asset sale announced earlier today as well as substantial layoffs that make it clear that the company won't be able to grow back to its former size even if energy prices rebound. Unless a pronounced rise in oil and gas prices comes soon, Chesapeake won't see a quick end to its troubles.

Cross-section of ground underlying well and pumping station, including rock layers and indication of equipment operation.

Image source: Chesapeake Energy.

Netgear plans a spinoff

Netgear stock fell 15% after the company announced fourth-quarter financial results as well as a strategic move to spin off one of its businesses. The networking equipment specialist said that it would put its Arlo security camera division into a newly formed company, with an initial public offering of shares to come in the near future. Critics of the move fear that Arlo won't be received well, even with Netgear choosing to issue less than 20% of its common stock in favor of holding onto the vast majority of shares. Yet investors were also troubled by a decline in earnings that was only partially caused by one-time issues related to tax reform. With competitors doing a better job than Netgear in turning sales into more profits, it's up to Netgear to show that it can up its game.

Manhattan Associates has a long way to go

Finally, shares of Manhattan Associates fell 17%. The supply chain management services specialist reported a more-than-2% drop in revenue that also led to a slight decline in adjusted earnings. Efforts to make a transition toward a cloud-based recurring revenue model gained traction, but CEO Eddie Capel emphasized that the recent move represented only the beginning of a longer-term transformation of the company. Yet poor guidance pointed to further declines in sales and profits, and investors appear to be more skeptical that Manhattan Associates will be able to achieve its end goals in a timely manner.

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Stocks Mentioned

Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
CHKA.Q
NETGEAR, Inc. Stock Quote
NETGEAR, Inc.
NTGR
$18.52 (-1.23%) $0.23
Manhattan Associates, Inc. Stock Quote
Manhattan Associates, Inc.
MANH
$114.60 (-2.08%) $-2.44

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

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