Why Teva Pharmaceutical Industries, Snap, and NetEase Slumped Today

Markets Motley Fool

Monday was a quiet but positive day for the stock market, as many investors traditionally lie low for the week of Thanksgiving. The Dow finished higher by 72 points, but most major benchmarks were up less sharply on a percentage basis. Generally favorable economic conditions persist, and investors seem to be optimistic about the prospects for the holiday shopping season for ailing retail stocks. Yet shares of some companies weren't able to participate in today's upward moves for the key indexes, and Teva Pharmaceutical Industries (NYSE: TEVA), Snap (NYSE: SNAP), and NetEase (NASDAQ: NTES) 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.

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Analysts raise doubts about Teva

Shares of Teva Pharmaceutical Industries fell more than 5% following mixed comments from late last week from analysts at Mizuho Securities. Mizuho cut its price target on Teva by 20% to $12 per share, keeping a neutral rating on the stock but raising some concerns about the company's future. On one hand, Teva faces the threat of a bond-rating downgrade that could push it into high-yield junk bond territory, making it much more difficult to access credit markets affordably. Mizuho isn't convinced that a downgrade must happen, but Teva will have to move aggressively to cut costs and reduce cash outlays to prioritize debt maintenance. With the company facing tough industry conditions in both its generic and specialty drug segments, Teva can't afford to make any mistakes in the near future.

Snap keeps sinking

Snap stock dropped over 4%, adding to its losses from earlier in the month. Fundamentally, many investors remain somewhat bullish on Snap's business prospects, especially given that key teen users still prefer its Snapchat service to social networks geared more toward older customers. Yet even sharp revenue gains of more than 60% in its most recent quarterly report haven't been enough to generate excitement about Snap stock, and growth in daily active users has slowed considerably in the past couple of years. Without a new catalyst to spur accelerating growth, Snap could have a lot of trouble breaking out of its current malaise.

NetEase pulls back

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Finally, shares of NetEase finished down 6%. The Chinese gaming company seemed to lose upward momentum following a big run higher last week following NetEase's third-quarter earnings report. Despite encouraging results, a few skeptics wonder whether NetEase is following the right strategy by dedicating resources toward its e-commerce plays rather than focusing entirely on the gaming industry. Yet with the shares still up more than 20% since the beginning of November even after today's drop, NetEase's move today won't scare long-term investors who've seen considerably more volatility in recent years than they've had to deal with lately.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NetEase. The Motley Fool has a disclosure policy.