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What Made Aptiv's Stock Fall 11% in January

February 6, 2020

Shares of Aptiv PLC (NYSE: APTV) were already trending down in January before the company reported earnings on Jan. 30. While results were above expectations, the company's guidance disappointed and pushed the stock down further. For the month, shares of Aptiv fell 10.7%, according to data provided by S&P Global Market Intelligence.

In October, Aptiv revised its full-year 2019 guidance down because of an ongoing strike at General Motors, a key Aptiv customer. Just three months later, Aptiv would beat its revised guidance with $14.4 billion in revenue, adjusted operating income of $1.5 billion, and earnings per share (EPS) of $4.80. Beating its guidance showed that the adverse effects of the strike weren't as bad as feared, though the company estimates they cost it $0.38 in EPS for the year.

These results likely wouldn't have knocked the stock down, but investors disliked the guidance. Aptiv is guiding for full-year 2020 revenue of $14.5 billion to $14.9 billion -- up only 4% year over year at the midpoint. Likewise, EPS guidance fell flat, with management guiding for $4.75 to $5.05. That's just 2% growth at the midpoint.

This disappointing guidance accounted for roughly half of Aptiv's January decline. The other 5% drop didn't come from anything newsworthy. Seasoned investors know that stocks fluctuate over the short term. Indeed, the stock has already gained back a couple of percentage points in February. However, it's important to not get distracted by the daily ups and downs. Rather, we should keep our eyes focused on the long term.

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