Electronic Arts, Rivian And Walgreens Are Among Top 13 Large Cap Losers Last Week (Jan 20-Jan 24): Are The Others In Your Portfolio?

The week of January 20-24 saw significant losses for several large-cap stocks, with Electronic Arts (EA), Rivian Automotive (RIVN), and Walgreens Boots Alliance (WBA) among the top 13 losers. These companies' underperformance raises questions about the risks and challenges they face, as well as the potential impact on other stocks in your portfolio. This article will delve into the reasons behind these companies' losses, the market conditions contributing to their underperformance, and the key risks and challenges they face, providing insights to help manage your portfolio.

Reasons Behind the Losses

1. Electronic Arts (EA):
- EA's preliminary Q3 2025 results led to a 17% stock plunge, with a full-year revenue outlook cut from $7.5 to 7.7% to $7 - $7.15. The challenging economics of the video gaming industry has led to the company cutting its outlook due to softening demand for its sports games, including its prominent EA SPORTS FC 25 video game.
- Analysts have downgraded EA's stock, with some finding reasons to stay optimistic, while others have expressed concerns about the company's growth prospects.
- EA's stock is on pace for its biggest daily percentage drop since 2008, as analysts parse key franchise's troubles.

2. Rivian (RIVN):
- Rivian's stock has decreased by 20.39% in the last 52 weeks, with a beta of 2.06, indicating higher price volatility compared to the market average.
- The company has experienced a significant selloff triggered by a downward revision in its Q3 revenue guidance, with analysts expressing concerns about the company's growth prospects.
- Rivian's stock has been volatile over the past 3 months, with a 17.59% change in the last 3 months and a -16.48% change in the last year.
- Rivian's stock price has decreased by 87.32% since its IPO, indicating a significant decline in the company's market value.

3. Walgreens (WBA):
- Walgreens has experienced a significant decline in its stock price, with a 47.43% decrease in the last 52 weeks.
- The company has reported a decrease in revenue and earnings, with a loss per share of -$10.24 in the last 12 months.
- Walgreens' stock price has decreased due to concerns about the company's financial performance and the impact of regulatory changes on the pharmaceutical industry.
- The company's current ratio of 0.64 and debt-to-equity ratio of 2.81 indicate financial strain, with a net cash position of -$30.51 billion or -$35.31 per share.

Market Conditions and Investor Sentiment

The market conditions and investor sentiment have contributed to the underperformance of WBA, RIVN, and EA compared to the broader market in several ways:

1. WBA (Walgreens Boots Alliance):
- The retail pharmacy sector has faced increased competition from other pharmacy retailers and online retailers, leading to a decline in WBA's stock price.
- Investors have been concerned about the company's ability to adapt to changing consumer behavior and maintain its market share.
- The company's dividend cut in 2022 also negatively impacted investor sentiment, as it signaled a decrease in the company's financial health.

2. RIVN (Rivian Automotive):
- The electric vehicle (EV) market has been volatile, with investors questioning the long-term viability of some EV companies and their ability to achieve profitability.
- Rivian's production delays and quality issues have raised concerns about the company's execution and its ability to meet production targets.
- The company's high valuation and significant losses have also made it a target for short sellers, further pressuring the stock price.

3. EA (Electronic Arts):
- The video game industry has faced challenges due to changing consumer preferences and increased competition from free-to-play and mobile games.
- Electronic Arts' recent guidance cut for its EA SPORTS FC 25 game has raised concerns about the company's ability to maintain its market share in the sports gaming segment.
- Investors have also been worried about the company's exposure to the Chinese market, which has been volatile due to regulatory changes and geopolitical tensions.

In comparison, the broader market has shown resilience, with the S&P 500 index posting gains of 1.83% and 34.14% for EA and the broader market, respectively, over the past year. This suggests that the underperformance of WBA, RIVN, and EA is not a reflection of broader market conditions, but rather specific challenges faced by these companies.

Key Risks and Challenges

1. Electronic Arts (EA):
- Softening demand for sports games, particularly EA SPORTS FC 25, leading to a cut in the full-year revenue outlook.
- Concerns about the company's growth prospects, with analysts expressing mixed opinions on the company's future performance.
- The company's reliance on a single franchise, EA SPORTS FC 25, which accounts for a significant portion of its revenue.

2. Rivian (RIVN):
- Volatile share price, with a beta of 2.06, indicating higher price volatility compared to the market average.
- Unprofitability, with the company not forecast to become profitable over the next three years.
- High debt levels, with a debt-to-equity ratio of 1.02, which could make it vulnerable to financial distress if it struggles to generate sufficient cash flows.
- Dependence on a single product, with the success of RIVN heavily dependent on its R1T and R1S models.

3. Walgreens (WBA):
- Competition from other pharmacy retailers and online pharmacies, leading to a decline in the company's market share.
- Regulatory risks, with changes in healthcare regulations and reimbursement policies potentially impacting the company's profitability.
- Supply chain disruptions, which could lead to stockouts and reduced profitability.
- Reputation risk, with any negative publicity or data breaches potentially damaging the company's reputation and impacting its customer base.

Managing Your Portfolio

To manage the risks and challenges faced by these companies and maintain a balanced portfolio, consider the following strategies:

1. Diversification: Allocate a portion of your portfolio to each of these companies to potentially benefit from their growth while mitigating the risks associated with each individual investment. Regularly review and rebalance your portfolio to ensure that it aligns with your investment objectives and risk tolerance.
2. Monitoring: Keep track of the latest developments and news related to these companies, as well as the broader market conditions, to make informed investment decisions.
3. Risk management: Implement stop-loss orders or use options strategies to protect your investments from significant losses. Consider hedging your portfolio against market downturns or sector-specific risks.
4. Rebalancing: Periodically rebalance your portfolio to maintain your desired asset allocation and risk exposure. This can help ensure that your portfolio remains diversified and aligned with your investment goals.

In conclusion, the underperformance of Electronic Arts, Rivian, and Walgreens highlights the importance of understanding the specific risks and challenges faced by individual companies, as well as the broader market conditions and investor sentiment. By diversifying your portfolio, monitoring the latest developments, managing risks, and rebalancing as needed, you can help ensure that your investments remain well-positioned to weather market fluctuations and capitalize on growth opportunities.