Image: Netflix.
Monday continued the trend toward recovery that the stock market has seen in recent weeks, and the day's news centered on hopes that concerns about a global macroeconomic slowdown would prove to be unwarranted. Gains in key commodities including crude oil and iron ore helped power a recovery in the hard-hit materials sector of the market, and signs that the dollar's huge rise in recent years could finally be ending helped support multinational corporations that do substantial portions of their business overseas. However, not all stocks managed to share in today's modest gains, and Netflix (NFLX 3.10%), Silver Standard Resources (NASDAQ: SSRI), and comScore (SCOR 4.44%) were among the hardest-hit stocks in the market on Monday.
Netflix fell 6% after analysts at ITG weighed in with bearish views about the online streaming video service. The negative note focused on concerns about whether Netflix would be able to achieve the growth in domestic streaming volume that the company expects, and the analyst company has had some success in pointing out similar trouble spots in the most recent quarter. The primary concern for Netflix continues to be whether the huge expected growth internationally will pan out in the way that investors want, because the stock currently carries a high valuation that depends on extensive penetration into major foreign markets. Lacking any margin of safety, Netflix remains volatile even when its fundamentals look sound if there's a perceived future threat.
Silver Standard Resources dropped 11% in the wake of its announcement of a substantial acquisition for the silver mining company. This morning, Silver Standard Resources said it would buy out Canadian peer Claude Resources in a deal worth roughly $250 million. The cash-and-stock deal will leave Claude shareholders with a combined interest of just less than one third in the post-merger company, and the parties pointed to the financial benefits and synergies that could result from the combination. As Silver Standard CEO Paul Benson said, "The combined company is well positioned to maximize value from our assets and pursue further growth opportunities." Yet investors focused on the price as well as the condition of the industry, and they fear that making bold moves could backfire for Silver Standard in the long run.
Finally, comScore lost a third of its value on Monday. The Internet-metrics specialist delayed its annual report and suspended its stock repurchase program pending the resolution of an accounting issue that its audit committee is investigating. Because of delays in getting the issues resolved, comScore decided it would have to postpone a previously scheduled investor day presentation. Investors don't know much about the exact issues involved, and once more details are known, it could well be that today's move will have been a huge overreaction. However, investors weren't willing to give comScore the benefit of the doubt, and until shareholders know what's going on with the company, comScore stock could remain under pressure for some time.
