Why Tesla, Blue Apron, and Yum China Slumped Today
Thursday was a bad day on Wall Street as investors reacted negatively to sluggish jobs data and the threat of escalating conflict with North Korea. The Dow Jones Industrials finished down more than 150 points, and broader market benchmarks fell an even steeper 1% from yesterday's closing prices. Adding to concerns was the continued investor rotation out of higher-growth sectors of the market, especially technology. Individual company news also weighed on certain high-profile stocks especially hard, and Tesla (NASDAQ: TSLA), Blue Apron (NYSE: APRN), and Yum China (NYSE: YUMC) 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.
Tesla hits the brakes again
Shares of Tesla finished down almost 6%, extending their two-day losses to 12%. Wednesday's declines stemmed from concerns among Wall Street analysts that the electric car maker wouldn't be able to reach more optimistic delivery targets for its Model S and Model X vehicles. News that automaker rival Volvo would include electric motors in its vehicles starting in 2019 also added to competitive pressure, and Tesla's Model S earned only an acceptable rating for offset frontal collision safety in a retest. Tesla has seen slumps like this before, and many bullish investors expect the stock to rebound in the long run. For now, though, the decline has taken Tesla's market capitalization down enough to make it less valuable than auto giant General Motors, which Tesla had surpassed during its bull-market run earlier this year.
Blue Apron leaves investors hungry
Blue Apron stock fell 9%, hitting new lows and closing nearly a fifth below its initial public offering price from just a week ago. The drop continues a trend that materialized even before the meal delivery service went public, as Blue Apron had to cut its IPO offering price from an initial range of $15 to $17 per share to a lower range of $10 to $11 per share. Skeptical analysts have noted that Blue Apron has had to pay increasing amounts to acquire new customers, and losses have ballooned higher in recent quarters. The fact that the stock has fallen below its IPO price is a bad sign for the company as well as a hit to early investors, and if Blue Apron can't convince shareholders that it can keep growing its niche, then the drop to date could be just the beginning of a longer, deeper decline for the stock.
Yum China can't satisfy investors' craving for growth
Finally, shares of Yum China Holdings dropped 13%. The operator of KFC and Pizza Hut locations in China reported only a modest rise in revenue for the second quarter of 2017, and same-store sales growth ranged from flat at Pizza Hut to up 4% at KFC. Net income did much better, soaring nearly 40%, but growth-hungry investors had wanted to see even better performance from the fast-food specialist. Yum China did manage to make progress on some key initiatives, including a steep rise in use of mobile payment systems and delivery service options, and many are hopeful that the new introduction of Taco Bell to China in late 2016 will eventually pay off. For now, though, shareholders were content to pause in what has been a strong 2017 for the restaurant stock so far.
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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.