Wall Street was in a generally good mood on Tuesday, happy to put the traditionally scary month of October behind it with major market benchmarks still at or near record highs. Favorable readings on the U.S. economy were enough to overcome political uncertainty in Washington, and good earnings from many stalwart companies in the market helped to make investors more comfortable with the nearly straight-up trajectory that stocks have enjoyed lately. Yet some companies suffered from less-pleasant news that held the their stocks back from partaking in the good cheer. Qualcomm (NASDAQ: QCOM), Shopify (NYSE: SHOP), and Mylan (NASDAQ: MYL) 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.
Qualcomm could lose a key customer
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Qualcomm sank 7% after reports surfaced that major customer Apple was considering changing suppliers for the modems in future iPhone models. The two companies have wrangled in litigation over the exclusivity that Qualcomm has negotiated, with the iPhone maker saying that competing chips would have been much cheaper to use if it could have made a switch previously. Qualcomm gets a substantial portion of its business from the iDevice pioneer, and investors now fear that a shift to a different modem supplier is actually feasible. It's too early to tell whether such a move will happen, but the impact would be large enough that the concern is justified.
Shopify sees big growth, but some aren't convinced
Shopify finished down 9% despite posting third-quarter financial results that continued to show solid growth. Sales jumped more than 70% from the year-ago quarter, and the e-commerce facilitator boosted its modest profit from 2016 levels. Investors have been nervous about the stock ever since well-known short-selling analyst Andrew Left of Citron Research criticized the company and its relationships with its marketing affiliates. Shopify said that regulators haven't contacted it about any potential problems, but those following the stock seem to want a more definitive resolution before they'll feel entirely comfortable with the company, even with its growth story intact.
Mylan sees the other shoe drop
Finally, Mylan shares fell 7%. The generic drug maker faces a new wrinkle in a government antitrust lawsuit after executive Rajiv Malik was among those newly accused of price-fixing activity. The attorney general of Connecticut sought to amend the civil complaint against Mylan and 17 other pharmaceutical companies to include the new allegations. Mylan responded that it "has deep faith in the integrity of its President, Rajiv Malik, and stands behind him fully." The pharmaceutical company also says it will defend the case "vigorously," but investors didn't seem to like the idea of it engaging in a potentially long, drawn-out battle with government regulators, especially given the challenges Mylan already faces in its core business.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends Mylan. The Motley Fool has a disclosure policy.