Why Square, Western Digital, and Weatherford International Slumped Today

Monday was the first regular day that investors in the stock market have seen in a while, with post-holiday trading reflecting a solid Thanksgiving weekend from the retail sector balanced by weakness in other areas. Major benchmarks were mixed and little changed from where they ended Friday's holiday-shortened session, but investors kept their attention squarely on Washington, where the Senate will take up tax reform in the homestretch of the year. Despite generally upbeat viewpoints on the market as a whole, shares of some companies posted significant losses. Square (NYSE: SQ), Western Digital (NASDAQ: WDC), and Weatherford International (NYSE: WFT) 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.

Square gives back its gains

Shares of Square dropped 16%, more than wiping out its double-digit percentage gain from last week. The electronic payment pioneer's rise had stemmed from optimism surrounding Square's embracing of bitcoin-based transactions within its platform. Yet after two straight weeks of gains, analysts at BTIG downgraded the stock from neutral to sell, citing concerns about the ability for Square to reach consistent profitability in the near future. Other analysts have seen Square's prospects more favorably, but the strategic bitcoin move does have a chance of backfiring if the cryptocurrency's recent explosive move higher reverses itself.

Western Digital faces a possible market reversal

Western Digital stock fell 7% after the company got a negative outlook from analysts. Morgan Stanley analysts downgraded the memory and storage specialist's shares along with those of several of Western Digital's peers, arguing that the recent boom in prices of NAND flash memory chips is likely at or near its high for the product cycle. With anticipated price declines coming, Western Digital could suffer a hit to its profits. Those who've been through past down cycles in memory know the damage it can do to stock prices, so it's not surprising to see Western Digital shareholders panic a bit at the prospect of a market top.

Weatherford looks less energetic

Finally, shares of Weatherford International finished down 7%. The oil and gas exploration and production company's move was largely fueled by a substantial decline in the price of crude, which dropped about $1 per barrel to fall below $58. In addition, Weatherford said that it would sell assets worth as much as $8 billion in order to manage its debt load, a prudent financial move that nevertheless highlighted the vulnerability of its balance sheet. Weatherford's growth hasn't been as strong as its peers' lately, and that's likely to weigh on its relative performance until the company can get things turned around.

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