Wall Street’s major indices kicked off the trading on a positive note, all finishing in the green territory, as investors brushed off fears of growing global trade tensions.
The Dow Jones rose by 0.38 percent, the S&P 500 grew 0.67 percent, while the Nasdaq rallied 0.98 percent.
However, 10 companies defied a broader market optimism, mostly due to a series of stock rating downgrades from investment research companies on the back of poor earnings guidance and dismal earnings performance.
In this article, we will take a look at which companies led the decline and explore the reasons behind their performance.
To come up with Monday’s worst performers, we considered only the stocks with at least $2 billion in market capitalization and $5 million in daily trading volume.
A person with stock market data on a laptop. Photo by Anna Nekrashevich on Pexels
10. Oklo Inc. (NYSE:OKLO)
Shares of Oklo retreated by 3.17 percent on Monday as investors took profits following a surge in its closing price on Friday.
The company recently enjoyed a boost last week from the confirmation of Chris Wright as the Energy department’s chief, especially since he was a member of OKLO’s board of directors.
With Wright’s installation, prospects for nuclear stocks and the energy industry, in general, looked even brighter over the Trump administration’s stance on prioritizing energy demand first over achieving net-zero goals.
Last month, Trump withdrew the US from the Paris climate deal, saying that the zero carbon policies pushed up the prices of energy for homes and businesses, threatened the reliability of energy systems, and undermined energy security.
OKLO, an advanced nuclear technology company, stands to benefit from the government’s energy expansion program.
9. American Airlines Group Inc. (NASDAQ:AAL)
American Airlines dropped 3.20 percent on Monday to finish at $16.62 apiece as investor sentiment was dampened by news of a bomb threat that caused significant delays to one of its flights last week.
The incident on Friday involved AAL flight 2863 set to leave Austin, Texas, which was disrupted for four hours after a young man renamed a WiFi hotspot to “there is a bomb on the flight.”
After no passenger admitted to the wrongdoing, police ordered everybody to deplane for re-screening.
The flight was cleared for takeoff after a few hours, but investors still reacted negatively to the news, selling off positions at the beginning of the week to flock to safer investments, especially as airline stocks are known to be highly sensitive to news related to safety and security issues.
8. Celsius Holdings Inc. (NASDAQ:CELH)
Celsius Holdings saw its share prices decline by 3.26 percent on Monday to finish at $21.68 apiece as investors sold off positions following a downgrade in the company’s stock rating.
On Monday, analysts from Stifel revised their outlook for CELH to $37 from $45 previously as they anticipate a shift in CELH’s sales growth patterns for the upcoming quarters of the year.
In particular, analysts expect CELH sales growth to drop by 8 percent in the first quarter, in contrast to the consensus 4 percent increase.
However, a recovery of 2 percent is expected in the second quarter, which falls below the consensus of 4 percent.
Despite the lower price target, Stifel remains optimistic about the company’s long-term prospects and its ability to navigate through challenging sales performance.
7. Rigetti Computing Inc. (NASDAQ:RGTI)
Rigetti Computing dropped for a third consecutive day on Monday, losing 3.89 percent to finish at $12.35 each, as investor sentiment was dampened by fears of growing trade tensions between the United States and some of its largest trading partners.
While RGTI is not expected to be directly impacted by tariffs, its stock has shown heightened sensitivity to developments in the Artificial Intelligence industry as well as news from Nvidia Corp., a key player in the booming AI which earlier promised its commitment to supporting the growth and development of the quantum computing sector.
With Trump promising the imposition of tariffs on all countries, NVDA, which sources its chips from other international suppliers such as Taiwan Semiconductor Manufacturing, could face significant challenges from any potential tariff imposition, impacting not only its operations but also other broader sectors, such as quantum computing.
6. Rumble Inc. (NASDAQ:RUM)
Shares of Rumble extended a losing streak for a third day on Monday, losing 3.92 percent to close at $12.25 apiece, as the flurry of positive news for the company failed to spark investor buying appetite.
RUM shares initially traded lower in morning trade before perking up to $13.15 apiece and again losing momentum towards the final trading session.
On Monday, RUM announced the inauguration of an official White House channel by US President Donald Trump as part of the government’s plan to expand its portfolio of content providers. The development spells positively for the company especially as it works its way to becoming a growing force in the video platform space.
Last week, meanwhile, RUM officially announced the departure of Michael Ellis as its general counsel to pursue a deputy director position for the Central Intelligence Agency. RUM said it gave Ellis worth $1 million payout upon his resignation.
5. Illumina Inc. (NASDAQ:ILMN)
Shares of Illumina dropped for a third consecutive day on Monday, shedding 5.47 percent to end at $104.99 each as investors continued to sell off positions following a downgrade on its stock rating.
On Friday alone, investment banking and research company TD Cowen cut its stock rating for ILMN to “hold” after reporting dismal earnings performance for the full year 2024.
According to ILMN, net loss widened to $1.2 billion from $1.16 billion in 2023 amid a 2.9-percent drop in its revenues at $4.37 billion versus $4.5 billion year-on-year.
The company, however, achieved a net income of $187 million last quarter, a reversal from the $176 million net loss registered in the same period a year earlier.
According to TD Cowen, its downgraded outlook also considered the company’s weaker-than-expected next-generation sequencing consumable growth, increasing competition, and geopolitical risks in China.
4. Viking Therapeutics Inc. (NASDAQ:VKTX)
Viking Therapeutics dropped its share prices by 7.34 percent on Monday to end at $30.17 apiece as investors reacted negatively to two investment firms’ significant dropping of their price targets for the company.
On Friday, Maxim lowered its price target for VKTX by 42 percent to $70 from $120 previously, citing the company’s wider-than-expected loss per share in the fourth quarter of 2024.
Meanwhile, B. Riley also lowered its price target for VKTX to $96 from $109, representing an 11-percent cut, while keeping the “buy” rating on the shares.
Despite a disappointing earnings performance, B. Riley noted that it was especially impressed by the strong results from its potential weight loss asset VK2735, which could potentially become a groundbreaking development in the field.
VKTX initiated the phase 2 clinical trial of the oral tablet formulation of VK2735 in January this year, testing 280 enrolled obese adults for 13 weeks.
3. ON Semiconductor Corporation (NASDAQ:ON)
ON Semiconductor saw its share prices drop for a second consecutive day, losing another 8.21 percent on Monday to close at $47.04 apiece as investors sold off on news of lagging 2024 earnings performance.
In a statement released to the media, ON said attributable net income in the fourth quarter of 2024 declined by 5 percent to $379.9 million from the $401.7 million registered in the same period a year earlier, as revenues dropped by 14.6 percent to $1.7 billion from $2.018 billion year-on-year.
Meanwhile, attributable net income for the full year 2024 fell 27.9 percent to $1.57 billion from $2.18 billion in 2023, as revenues tumbled 14 percent to $7.08 billion from $8.25 billion.
Also adding to investor sentiment was the company’s conservative outlook for the year, with first-quarter revenues expected to settle between $1.35 billion and $1.45 billion, with earnings per share pegged at $0.42 to $0.52, saying the full year “remains uncertain” for the company.
2. Millrose Properties Inc. (NYSE:MRP)
Millrose saw its share prices fall by 13.95 percent on Monday to end at $23.01 apiece following the completion of Lennar Corp.’s spinoff of MRP to LEN stockholders.
The spinoff which was completed on Friday involved the distribution of approximately 80 percent of MRP shares to stockholders of LEN.
Each LEN shareholder as of record date January 21, 2025, received one share of MRP common stock.
Investors, however, quickly sold off positions in MRP to book early profits following Friday’s 16-percent premium from Thursday’s closing price.
MRP engages in land purchases, horizontal development, and homesite option purchase arrangements for LEN and potentially other homebuilders and developers.
While LEN is currently MRP’s only customer, the latter anticipates that its “first of its kind” public vehicle will be attractive to other homebuilders seeking to implement an asset-light strategy and believes that becoming a capital source for other homebuilders will provide for accretive growth to the MRP platform.
1. Semtech Corp. (NASDAQ:SMTC)
Semtech nosedived 31.02 percent on Monday to close at $37.6 apiece as investors sold off on news that Nvidia Corp. was pulling back support for a server rack configuration that used SMTC’s cable products, and that NVDA is coming out with a new processing unit and may be making the change to address overheating issues.
According to SMTC, it now expects sales of its CopperEdge products, which are used in copper cables, to be lower than the $50 million floor it previously targeted for fiscal year 2026.
Benchmark analyst Cody Acree said that NVDA’s decision was in line with its commitment to prioritize its resources to ensure a smooth generational transition to a system that was mired with overheating issues.
However, Acree believes that the news would not be as devastating to the company’s business as initially indicated in the soft after-market trading.
While we acknowledge the potential of SMTC 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 timeframe. If you are looking for an AI stock that is as promising as SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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