Wall Street responded to Monday’s bright and shiny performance with a hefty selloff on Tuesday, aided by a slump in crude oil that crunched energy stocks, and a weak Chinese manufacturing reading that sent materials stocks to the floor. The end result was a 0.9% loss for the S&P 500 and a 0.8% decline for the Dow Jones Industrial Average.
More pain could be on the way today. A number of companies are getting knocked down on weak quarterly earnings reports, including Glu Mobile Inc. (NASDAQ:GLUU). Meanwhile, BHP Billiton Limited (ADR) (NYSE:BHP) faces a massive lawsuit from Brazil, while Tesla Motors Inc (NASDAQ:TSLA) looks wobbly heading into its first-quarter earnings report.
BHP Billiton Limited (ADR) (BHP)
BHP investors are suffering a 1-2 punch from China and Brazil.
News that China’s Caixin Manufacturing Purchasing Managers’ Index reading fell month-over-month in April sent a number of material stocks to the mat on Tuesday. BHP fell 5%, joining drops by Freeport-McMoRan Inc (NYSE:FCX, -11.4%) and Vale SA (ADR) (NYSE:VALE, -7.8%), among others.
Now, BHP looks set to yield another 8% on Wednesday amid reports that Brazilian prosecutors have filed a $43.3 billion ($58 billion Australian) lawsuit against iron miner Samarco — owned by BHP Billiton and Vale — over a fatal dam collapse in 2015.
According to ABC in Australia:
“The total damages, prosecutors said, were calculated based upon the cost of the Deepwater Horizon oil spill in the United States — BP’s total pre-tax charge for that spill reached $US53.8 billion ($71.89 billion).”
The companies reached a settlement with the Brazilian government in a separate lawsuit in March for $5.6 billion ($7.5 billion Australian). However, federal and state prosecutors in the country criticized that settlement as insufficient.
Glu Mobile Inc. (GLUU)
Gamemaker Glu Mobile is gearing up to fall on its face this morning thanks to a Street-beating (but still lackluster) first-quarter earnings report.
Glu, the maker of Kim Kardashian: Hollywood and Cooking Dash, saw GAAP revenues plunge 22% in the company’s Q1 to $54.5 million. However, adjusted sales of $54 million still were enough to top consensus estimates for $48.2 million.
Meanwhile, adjusted earnings also got past the Street, with the company posting a 3-cent loss versus an expectation for a 5-cent loss. Still, that represented a swing from a 2-cent gain in the year-ago quarter.
The disappointment that likely had shares reeling was second-quarter guidance. Glu Mobile said it expects to lose 5 to 6 cents per share on revenues of $46 million to $49 million, with both figures well under Wall Street expectations for a 4-cent loss on $58.98 million, respectively.
While the company expressed its excitement for new titles Britney Spears: American Dream and Gordon Ramsay: Dash, investors’ heads were elsewhere. GLUU shares were off 16% in premarket trading.
Tesla Motors Inc (TSLA)
While Wall Street was making much ado about Apple Inc.’s (NASDAQ:AAPL) historic eight-day losing streak, Tesla has been putting together a pretty bad run of its own, with shares off in four of the past five trading days for an 8%-plus loss heading into tonight’s earnings report.
As it stands right now, TSLA could be due for one more dip between now and then.
Tesla dipped more than 3% on Tuesday amid UBS’ prediction that the electric vehicle company would post a deeper-than-expected quarterly loss, and likely also fall short of full-year sales estimates.
Analysts currently estimate that Tesla will lose 58 cents per share for its first quarter, but UBS analysts see that number coming in at 90 cents per share. Meanwhile, those same analysts think Tesla’s already-reported deliveries shortcoming will hamper the company’s ability to reach full-year deliveries of 80,000 to 90,000 vehicles, which Tesla insists it’s still on track to reach.
TSLA shares are off another 1% in premarket trading, and are sitting right above both their 50- and 200-day moving averages — which have, for the record, recently scrawled out a bullish golden cross.
UPDATE: Tesla dropped even more intraday on news that two of its vice presidents are leaving the company. Production VP Greg Reichow and manufacturing VP Josh Ensign are defecting, with the announcement coming just hours before Tesla’s first-quarter earnings report.
Kyle Woodley is the Managing Editor of InvestorPlace.com. As of this writing, he was long TSLA. Follow him on Twitter at @KyleWoodley.
