US shares kicked off Monday’s trading with a bounceback from last week’s pessimistic sentiment, as economies took a pause from their tariff war.
Additionally, investors breathed a sigh of relief on the February retail sales report which came in not as bad as feared.
According to the latest figures, retail sales rose 0.2 percent, albeit below the 0.6 percent as expected by analysts. Excluding autos, sales are up by 0.3 percent, in line with economists’ expectations.
Following the news, the Dow Jones clocked in a 0.85-percent gain, followed by the S&P 500 with 0.64 percent, and the tech-heavy Nasdaq with 0.31 percent.
Meanwhile, 10 companies bucked a wider optimistic sentiment over a flurry of negative corporate news that weighed down on their shares. In this article, we have listed Monday’s 10 worst performers and detailed the reasons behind their drop.
To come up with the list, we considered only the stocks with $2 billion market capitalization and $5 million in trading volume.
Stock market data. Photo by Photo by Alesia Kozik
10. Cleveland-Cliffs Inc. (NYSE:CLF)
Cleveland-Cliffs dropped its share prices by 2.31 percent on Monday to finish at $10.15 each as investors continued to digest news of legal proceedings involving the company over allegations that it sabotaged US Steel and Japan-based Nippon Steel’s merger deal.
In a federal court last week, lawyers for US Steel (NYSE:X) accused CLF and United Steelworkers union leadership of conspiring to sabotage what would have been a merger between X and Nippon.
According to the report, the allegations constituted a deliberate act to dominate the steel market. Both X and Nippon sued CLF, its CEO, and the union president.
In January this year, former president Joe Biden blocked the potential merger, saying that the steel producers and the American steelworkers “are the backbone of our nation.”
However, a report by Reuters said that President Donald Trump may now allow Nippon to acquire X, as the administration filed a motion to extend two deadlines in a lawsuit against a US national security panel to give the government more time to wrap up merger talks with the firms.
Trump said last month that he would not mind if Nippon acquires a minority stake in X.
9. VNET Group Inc. (NASDAQ:VNET)
VNET Group declined by 2.32 percent on Monday to finish at $11.38 apiece as investors sold off positions despite an upgrade in its stock rating and price target and impressive earnings performance last year.
On Monday, Bank of America raised its price target for VNET to $17.30 from $14.50 previously, representing a 52-percent upside from its closing price on Monday, while maintaining its “buy” rating on the company.
The more optimistic outlook was based on the company’s much higher guidance on capacity delivery targets, now between 400 to 450 MW as compared with the 153MW actual delivery in 2024.
In its latest earnings release, VNET said it narrowed its fourth-quarter net loss attributable to the company by 99 percent to RMB11.1 million from RMB2.4 billion in the same period a year earlier, as net revenues increased by RMB2.246 billion from RMB1.898 billion.
Meanwhile, it swung to a net income of RMB183 million in full-year 2024 from a RMB2.6 billion net loss a year earlier, as revenues grew by 42 percent to RMB1.832 billion from RMB1.292 billion.
“Moving into 2025, we remain confident in the Chinese market’s growth potential. Recent AI breakthroughs are propelling AI development domestically, spurring inference demand, and reducing costs. This is boosting industry-wide enthusiasm for investing in AI, unlocking greater demand for high-performance data centers and reliable IDC services. As a leading player with a clear expansion path for such advanced capacity, we are well-positioned to capture rising market opportunities, driving our sustainable growth,” said VNET CEO Josh Sheng Chen.
8. SoundHound AI Inc. (NASDAQ:SOUN)
SoundHound AI saw its share prices decrease by 2.51 percent on Monday to end at $10.08 each following news that it was being investigated by a shareholder law firm over allegations that the company may have issued materially misleading business information to the investing public.
The investigation stemmed from a Notification of Late Filing with the Securities and Exchange Commission for its annual report last year due to the complexity of accounting for its prior acquisitions of Synq3 and Amelia Holdings.
The notification furthered that SOUN “has identified material weaknesses in its internal control over financial reporting. These material weaknesses continue to exist as of December 31, 2024.”
SOUN was expected to officially file its annual report by Tuesday, March 18, 2025.
Meanwhile, SOUN is participating in the 2025 NVIDIA GPU Technology Conference (GTC), from March 17-21 in San Jose, California, where it showcases cutting-edge voice AI innovations that are transforming the automotive industry and redefining in-car experiences.
7. Affirm Holdings Inc. (NASDAQ:AFRM)
Affirm Holdings declined by 4.23 percent on Monday to end at $47.96 each following news that Swedish Buy Now Pay Later (BNPL) firm Klarna Group would unseat AFRM as the exclusive provider of installment loans at retail giant Walmart.
In a statement on Monday, Klarna, an AI-powered payments and commerce network, said that it would partner with OnePay, a leading consumer finance app, to exclusively offer installment loans for purchases at Walmart in the United States.
AFRM has been Walmart’s BNPL exclusive provider since 2019.
According to Klarna, the change will be made gradually. OnePay will start integrating Klarna installment loan options into Walmart’s checkout in the coming weeks across all Walmart channels.
Meanwhile, AFRM said in a statement that it will continue with its long-term strategy of competing on its products and entering into sustainable partnerships.
6. Credo Technology Group Holding Ltd. (NASDAQ:CRDO)
Credo Technology dropped its share prices by 4.33 percent on Monday to end at $47.02 each as investors repositioned portfolios following news that it filed a patent infringement complaint against four companies for the importation of products that infringe its patents related to Active Electrical Cables (AEC).
Last week, CRDO asked the United States International Trade Commission to initiate an investigation against Amphenol Corporation, Molex LLC, TE Connectivity PLC, and Volex PLC to block the importation of its AECs.
In addition, CRDO said it was filing parallel complaints in the Federal District Court alleging willful infringement as it provided notice of its patents to the said companies in September 2023.
“The action against these companies reflects Credo’s commitment to protecting its foundational innovations in AEC technology. Since its founding in 2008, Credo has developed, created, and delivered to U.S. customers a variety of high-speed wired connectivity solutions in the data infrastructure market, including its series of distinctive purple HiWire AECs,” the company said.
5. Capital One Financial Corp. (NYSE:COF)
Capital One saw its share prices fall by 3.85 percent on Monday as investors sold off positions following concerns about its potential acquisition of Discover Financial for $35.3 billion, saying that it was “anti-competitive.”
According to a report by The Capital Forum, the Department of Justice was said to have found the deal “anticompetitive” in the subprime sector.
COF and Discover Financial secured their shareholders’ approval of the merger last month, and the transaction was expected to be closed early this year, subject to customary closing conditions, including the approval of the Federal Reserve and the Office of the Comptroller of the Currency.
Meanwhile, the Delaware State Bank Commission gave its green light for the proposed acquisition in December.
“Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies,” said COF Chairman and CEO Richard Fairbank in a statement last month.
4. Tesla Inc. (NASDAQ:TSLA)
Shares of Tesla dropped by 4.79 percent on Monday to finish at $238.01 apiece following a downgraded stock rating from an investment firm.
In a note to its clients on Sunday, Mizuho analyst Vijay Rakesh said he lowered his price target for TSLA to $430 from $515 previously, as he expects a lower vehicle delivery forecast of 1.8 million from 2.3 million as expected prior.
Rakesh chalked up TSLA’s sales woes to weakening brand perception in the US and the European Union, as well as a “deterioration in geopolitics”, a cut-throat competition in China from domestic EV firms.
Meanwhile, TSLA was said to have partnered with Chinese firm Baidu to recalibrate its China strategy.
In addition, TSLA is also offering a free trial of Full Service-Driving autonomous software in China from March 17 to April 16.
TSLA has been struggling with self-driving issues in data collection in China amid the Chinese government’s data privacy laws which prevent the company from sending data collected to its servers in the US.
3. Peloton Interactive Inc. (NASDAQ:PTON)
Peloton Interactive dropped its share prices by 6.52 percent on Monday to end at $6.59 apiece as investors resorted to profit-taking amid the lack of fresh catalyst to sustain Friday momentum.
Last week, PTON rallied by 16.6 percent after Canaccord raised its outlook for PTON to “buy” from “hold” previously, citing the company’s progress in rebounding to profitability and its strong position in the fitness industry. It also gave the company a $10 price target, representing a 42-percent upside from its latest stock price.
According to Canaccord, PTON is well-positioned for future growth, supported by a loyal member base of 6 million.
For the full year 2025, Canaccord expects PTON to achieve between $300 million and $350 million in adjusted EBITDA, a significant jump from the $3.5 million in the full year 2024.
Additionally, it sees revenues to inflect next year with new initiatives to be supported by subscriber growth by 2027.
2. Discover Financial Services (NYSE:DFS)
Discover Financial lost 6.86 percent of its value on Monday to end at $152.99 each as investors sold off over concerns that its potential merger with Capital One might not push through.
According to a report by The Capital Forum, the Department of Justice was said to have found the COF’s $35.3-billion acquisition of DFS as “anticompetitive” in the subprime sector.
COF and DFS secured their shareholders’ approval of the merger last month, and the transaction was expected to be closed early this year, subject to customary closing conditions, including the approval of the Federal Reserve and the Office of the Comptroller of the Currency.
Meanwhile, the Delaware State Bank Commission gave its green light for the proposed acquisition in December.
1. RLX Technology Inc. (NYSE:RLX)
RLX Technology fell for a second day on Monday, losing 13.27 percent to close at $1.96 each as investor sentiment was dampened by a downgraded rating and outlook for the company.
On Monday, Citi said it downgraded RLX to “neutral” from “buy” previously, while also lowering its price target to $2.5 from $2.8 previously following the company’s fourth-quarter earnings performance.
In the fourth quarter of the year, RLX said net income attributable to the company fell by 42.8 percent to RMB121.96 million from RMB213.5 million in the same period a year earlier, while revenues rose by 56 percent to RMB813.4 million from RMB520.5 million year-on-year.
For the full-year period, RLX said net income attributable to the company was up by 3.18 percent to RMB551.8 million from RMB534 million in 2023, while revenues increased by 73 percent to RMB2.748 billion from RMB1.586 billion year-on-year.
While we acknowledge the potential of RLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as RLX but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
