Why Herbalife, Energy XXI Gulf Coast, and Carvana Slumped Today
The stock market climbed higher on Monday, bouncing back from substantial losses last week as geopolitical tensions eased and investors refocused their attention on the general strength of the U.S. economy. Major benchmarks moved higher by half a percent or more, with the technology-heavy Nasdaq Composite gaining the most ground after suffering a disproportionately large share of the declines in previous market sessions. Even though the general mood on Wall Street was favorable, some stocks nevertheless failed to participate in the rally. Herbalife (NYSE: HLF), Energy XXI Gulf Coast (NASDAQ: EXXI), and Carvana (NYSE: CVNA) 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.
Shares of Herbalife fell 5% on speculation about the potential for greater Chinese scrutiny of the multilevel marketing industry. China has attacked the industry in the past, with some arguing that the Chinese government sees the emphasis on individual achievement as part of a larger network as a potential threat to its control of the nation's economic and social structure. China is a huge market for Herbalife, so the company can ill afford to lose it by alienating regulators that have the power to put a major crimp in its global business. Moreover, after having made a misstep in marketing to the emerging-market nation, Herbalife needs to execute better than ever in China in order to make up lost ground.
Image source: Herbalife.
Source: Fool.com
