The stock market had a tough session on Thursday, with the Dow Jones Industrial Average finishing down over 300 points. Investors continued to worry about rising interest rates in the U.S., but they also turned their attention to the global macroeconomic picture, where new concerns about the prospects for growth in areas like Europe and China weighed on sentiment. Controversy about the death of a Saudi journalist also rippled across the diplomatic world, creating even more uncertainty. Company-specific news hurt certain stocks, and Activision Blizzard (NASDAQ:ATVI), United Rentals (NYSE:URI), and Gap (NYSE:GPS) were among the worst performers on the day. Here's why they did so poorly.
Activision's blockbuster release isn't enough
Shares of Activision Blizzard finished lower by 8% despite what for just about any other company would have been a highly successful game release. The latest installment in one of Activision's most important franchises, Call of Duty: Black Ops 4, brought in more than $500 million in worldwide sales in just its first three days of release, and the game set new records for most combined players, average hours played per player, and total hours played. Yet those who follow the stock closely were actually disappointed by the game's sales performance, having anticipated unit volume as much as 20% higher. Shareholders will have to look carefully at overall sales figures as they develop over the next month to see whether Activision's decision to release a new game earlier in the year than it has in the past will pay off.
United Rentals leaves investors wondering about the future
United Rentals stock dropped 15% in the wake of the release of the company's third-quarter financial results. The rental equipment specialist said that revenue climbed almost 20% from year-earlier levels, with strength in the rental business coming in part from organic growth and partially from several strategic acquisitions over the past year. CEO Michael Kneeland was pleased with the performance, noting that "internal and external indicators point to a solid fourth quarter and healthy momentum into 2019." However, analysts following the stock weren't satisfied with the news, with Macquarie cutting its price target from $130 to $99 per share. If United Rentals has to deal with challenges like tariffs in a tough rental rate environment, it could prove problematic for its long-term business prospects.
Gap falls on downbeat expectations
Finally, shares of Gap fell 6%. The apparel retailer got downgraded by analysts at JPMorgan, who pointed to weakness in sales volume and increasing pressure on profit margin levels in reducing their rating on Gap from neutral to underweight. With the holiday season approaching, Gap could face higher costs due to tariffs on imported goods, and analysts also pointed to ongoing operational challenges that have plagued the retailer. Investors have been unsure about Gap and its ability to bounce back from slowing growth trends for some time now, and today's downgrade didn't do anything to calm their nerves about Gap's future performance.