The S&P 500 had a decent run in August 2024, rising 126 points, or 2.3%, on the back of mostly positive economic news. However, the ride wasn’t smooth—while 52 of the S&P 500’s 503 components surged more than 10%, about 20% saw their prices drop by 10% or more. Three well-known companies even took a hit of over 30%.
So, what went wrong with these three worst-performing S&P 500 stocks in August? And more importantly, are they worth buying now, or should you steer clear? Let’s dive in and find out.
Super Micro Computer: Down 31.88% in August
Super Micro Computer (SMCI) had a rough August, plunging 31.88% in value from its high of $626.69 on August 15th . Known for its server systems, the company reported mixed results for its fourth quarter, and while it announced a 10-for-1 stock split, investors were more concerned about the company’s thin profit margins. This news sent the stock down over 20% the next day.
Adding fuel to the fire, a short-seller firm published a critical report about Supermicro in the last week of August, coinciding with the company’s delay in filing its annual report. This one-two punch resulted in another significant drop.
Supermicro’s pricing strategy is raising eyebrows, especially with its AI servers being sold at lower margins than other products. The company says margins should improve in 2025, attributing the current dip to its rapid expansion and investment in new technology.
Is Super Micro Computer a risky buy? It could be if you believe in its long-term pricing power. If not, safer options like Dell might be worth considering.
Moderna: Down 19.25% in August
Moderna (MRNA) took a big hit in August, down approximately 19.25% from its high of $89.96 on August 19th. The vaccine innovator reported second-quarter results that beat revenue expectations but missed on earnings. More concerningly, it slashed its full-year sales outlook from around $4 billion to $1.3 billion, citing weaker-than-expected sales in Europe and increased competition in the U.S. market.
Moderna is working to diversify with a broad pipeline targeting other diseases, including respiratory viruses. However, with intense competition and challenges in gaining regulatory approvals, the road ahead is uncertain. Although some prominent investors are still buying, there are too many question marks for many to jump in right now.
Dollar General: Down 34.27% in August
Dollar General (DG) looked like it might dodge August’s downturn until the last few days of the month. The discount retailer posted disappointing second-quarter results, missing earnings and revenue targets. Management noted that customers are feeling the pinch of financial constraints, forcing them to lower full-year sales expectations.
In response, Dollar General plans to roll out more aggressive rebates this fall to attract shoppers, but this approach could squeeze already tight profit margins even further. The company’s stock is at a 7-year low, and the path to recovery looks tough, especially if deeper discounts lead to a price war with competitors.
Final Thoughts
When it comes to investing in these struggling stocks, caution is key. Super Micro Computer presents a speculative opportunity if you believe in its potential turnaround, but it comes with risks. Moderna and Dollar General, on the other hand, face significant challenges that make them less appealing right now. It’s important to weigh the risks and consider whether these stocks fit within your investment strategy. Sometimes, the best move is to stay on the sidelines and look for more stable opportunities elsewhere.
Thank you for joining us on this journey. Remember, the best investment you can make is in yourself. Happy investing!
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