The S&P 500 (SNPINDEX: ^GSPC) got off to a solid start in 2024, gaining 1.6% in January. While hopes for a quick interest-rate cut cooled off, generally strong economic data, a solid start to earnings season, and continued excitement about artificial intelligence (AI) helped drive the index higher. The chart below shows the index's performance.
However, not every stock was a winner last month. Let's take a look at the three worst-performing S&P 500 stocks in January to see if any are worth buying on the dip.
1. Tesla (down 24.6%)
Tesla (NASDAQ: TSLA) has been one of the best-performing stocks on the market over the last decade, but that didn't help the electric-vehicle (EV) maker in January, when it was the worst-performing stock in the S&P 500.
It fell steadily over much of the month as the company announced another round of price cuts, and news reports circulated over EVs having trouble in cold weather, adding to concerns that demand for EVs is slowing. Meanwhile, CEO Elon Musk seemed to raise the potential of leaving the company if he didn't gain more voting power to ensure he had control of the AI systems the company was building.
However, much of Tesla's slide came after it issued a disappointing fourth-quarter earnings report on Jan. 24. The company reported just 3% revenue growth year over year and another quarter of declining profits.
Musk also said on the earnings call that production growth would slow in 2024, though he did not give specifics. Altogether, the update convinced investors to temper their expectations about the EV company.
While it has some promising growth prospects in AI and with its upcoming next-gen lower-cost vehicle, the near-term headwinds look challenging, especially considering the weakness in the EV industry. Even at a discount from previous heights, Tesla stock still looks too pricey.
2. Archer-Daniels-Midland (down 23%)
Agricultural giant Archer-Daniels-Midland (NYSE: ADM) was another one of the biggest losers on the S&P 500 last month. Its losses were almost entirely due to revelations of an accounting probe that led to its chief financial officer being placed on administrative leave and a delay in its fourth-quarter earnings report.
The company (known as ADM for short) said that an investigation was being done by outside counsel and the board's audit committee regarding accounting practices. The investigation began with a document request from the Securities and Exchange Commission (SEC).
ADM also updated its full-year earnings per share (EPS), calling for $6.90, which was less than the consensus at $7.06.
The food-processing and commodities-trading company has yet to release its fourth-quarter earnings report, and the details of the accounting investigation are still unclear. Often, such probes require past financial statements to be restated, which could weigh further on the stock.
Management is seeing revenue and profits fall, and it expects to miss guidance for the full year. At this point, ADM stock seems best avoided.
3. MarketAxess (down 23%)
MarketAxess (NASDAQ: MKTX), which runs a leading electronic trading platform for fixed-income securities, saw its stock fall sharply last month, primarily due to its fourth-quarter earnings report.
The fourth-quarter results were decent, with revenue up 11% year over year to $197.2 million, meeting estimates, and EPS rising 15% to $1.84, ahead of the consensus at $1.73.
However, the stock fell sharply when investors reacted negatively to comments saying that its market share in high-yield bonds was down to around 13% in January. The company also seems to have fallen behind chief competitor Tradeweb Markets, which has significantly outperformed the stock in recent years.
Also, MarketAxess lost its chief financial officer last year, which can be a cause for concern when there are other problems with a company.
Overall, the sell-off looks exaggerated, but MarketAxess has underperformed the market for years, and its market share losses to Tradeweb are concerning. Despite the sell-off, the stock still isn't a buy.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MarketAxess and Tesla. The Motley Fool has a disclosure policy.
