Breakfast News: SEC Scrutiny Sinks AppLovin

Breakfast News: SEC Scrutiny Sinks AppLovin

1. APP Drops 14% on Data Probe News

AppLovin (APP -14.03%) closed 14% lower following a Bloomberg report saying the Securities and Exchange Commission (SEC) was probing the company over data-collection practices in response to a whistleblower complaint.

• "We regularly engage with regulators and if we get inquiries we address them in the ordinary course": The tight-lipped response from AppLovin gave little away, with concern around the company violating platform partners' service agreements via pushing targeted advertising to customers.
• Largest intraday decline in six months: The probe news triggered a sharp sell-off in the stock, as any findings could result in enforcement actions or fines, although no wrongdoing has been confirmed yet.

2. Novo Nordisk Cuts Hit U.S. Wegovy Plant

According to Reuters, Stock Advisor recommendation Novo Nordisk (NVO 0.12%) has laid off dozens of workers at its main Wegovy U.S. manufacturing site, in a sign of further restructuring under new CEO Mike Doustdar.

• "This process takes time and our highest priority is to support our employees": A spokesperson referred to the 9,000 global job cuts announced last month, with even front-line manufacturing roles going as the business tries to cut costs.
• Aiming to recover ground from key rival: The company has been under pressure from Eli Lilly (LLY 0.61%), but Fool contributor Brian Orelli noted "it's not a zero sum game so even though Eli Lilly looks much better because of the tolerability is so poor of these drugs, Novo Nordisk is going to get some percentage of those patients."

3. Trump Slaps 25% Tariff on Imported Trucks

President Trump announced fresh 25% tariffs starting next month on medium and heavy-duty truck imports, in a further move to shield U.S. manufacturers from foreign competition.

• Existing trade deals mostly cover light-duty vehicles: Agreements with Japan and the European Union have a 15% tariff on some vehicle specifications, with more details pending on if the 25% will represent an increase across the board.
• Wider tariff strategy motives are clear: Alongside national security concerns, Trump had previously cited a desire to help domestic truckmakers, with the move likely benefiting stocks like Paccar (PCAR 0.58%).

4. STZ Pops on Earnings; McCormick up Next

Constellation Brands (STZ -2.24%) jumped over 3% after the closing bell thanks to beating earnings expectations, although a 7% fall in beer sales and lower shipment volumes tempered investor optimism.

• "We continue to navigate a challenging socioeconomic environment that has dampened consumer demand": CEO Bill Newlands offered a cautious tone, but said the business is focused on disciplined innovation and driving distribution.
• Aiming to build on a strong Q2 performance: McCormick (MKC -0.70%) is set to report before the market opens, with investors watching for any signs of changing consumer behavior and the navigation of elevated commodity costs.

5. Aluminum Fire Disrupts U.S. Automakers

The WSJ reports a fire at a key New York aluminum plant could disrupt operations for automakers including Ford (F 0.47%) in the coming months, given the extent of the damage caused.

• "This represents a serious question for the production of F-150 because that's the aluminum that comes out of Oswego": Kaustubh Chandorkar, an aluminum-industry analyst, pointed out the reliance Ford has on the site, with it potentially being large enough to warrant mentioning in earnings later this month.
• Major portion of the plant offline until early next year: Given the plant operator supplies 40% of aluminium sheet for U.S. automakers, other companies face disruption and a desire to use alternate suppliers.

6. Your Take

AppLovin rose 49.2% last month, and was the second top-performing stock in the S&P 500 in September. While Stock Advisor recommended members sell AppLovin in mid-August, Motley Fool CEO and co-founder Tom Gardner recently commented "In certain environments – PGI above 14 and VIX above 50 – we move very aggressively and select a stock like AppLovin (clearly sold too soon, but still a fine return)."

What other stocks have shot up considerably in the last month or so, which you are unconvinced can beat the market over five years from now, and why? Debate with friends and family, or become a member to hear what your fellow Fools are saying.