Wall Street seemed to phone it in on Monday, with low volume and fairly modest moves for most major benchmarks reflecting the fact that many federal and state government offices were closed for a holiday. Interest rates stabilized after a substantial jump last week, but market participants are still working through the potential consequences of the rate rise that resulted in 10-year Treasury yields hitting their highest levels since the early 2010s. Moreover, some negative news regarding individual companies weighed on sentiment. Square (NYSE:SQ), Ebix (NASDAQ:EBIX), and iRobot (NASDAQ:IRBT) were among the worst performers on the day. Here's why they did so poorly.
Is Square riskier than previously thought?
Shares of Square fell 9% after the payment processing specialist got negative comments from Wall Street analysts. Analyst company BTIG weighed in on Square, suggesting that the company could have credit risk from products planned to allow customers to borrow from Square more extensively. With interest rates on the rise, investors are looking more critically at companies' exposure to the credit markets. Square's growth initiatives have drawn positive comments from those looking at the stock in the past, but shareholders will have to weigh the potential benefits against the risks of all the innovations that the payment processor is looking to make in the near future.
Ebix makes a change
Ebix stock plunged nearly 20% in the wake of the company's decision to name a new independent registered public accountant. The software developer announced in a regulatory filing late Friday that it had replaced outgoing firm Cherry Bekaert with new accountants T.R. Chadha & Co. effective Oct. 5. At least one stock analyst saw the plunge in the shares as a buying opportunity, with Maxim Group maintaining its buy rating on the stock. Yet after having plateaued for much of 2018 following a major run-up in previous years, Ebix seems vulnerable to investor fears that the change in accounting companies could be a harbinger of future problems for the company.
iRobot gets dealt a downgrade
Finally, shares of iRobot dropped 9%. The robotic vacuum cleaner manufacturer found itself the target of negative comments from analysts at Piper Jaffray, who downgraded shares of the stock from overweight to neutral. Piper thinks that trade disputes specifically targeting iRobot's products could weigh on the vacuum maker's business going forward, and the fact that the stock nearly doubled from May to August points to a rich valuation for the shares. Few dispute iRobot's command of its industry, but with a greater recognition of some of the risks involved, shareholders seemed inclined to book some of their profits rather than letting all of their gains ride on iRobot's future.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends iRobot and Square. The Motley Fool has the following options: short January 2019 $80 calls on Square. The Motley Fool has a disclosure policy.