What Happened?

A number of stocks fell in the afternoon session after geopolitical tensions between the United States and the European Union escalated, sparking fears of a renewed trade war. 

The broader markets adopted a "risk-off" mode, with investors seeking safe-haven assets amidst the uncertainty. The market's primary fear gauge, the VIX, jumped to a fresh eight-week high, signaling rising investor anxiety. The dispute, centered on Greenland, raised the possibility of a revived trade conflict, which could disrupt global supply chains and economic activity. Mega-cap technology stocks, many of which have significant international sales and operations, were particularly affected by the souring risk sentiment as a potential trade war threatens their global business models.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Advertising & Marketing Services company Taboola (NASDAQ: TBLA) fell 2%. Is now the time to buy Taboola? Access our full analysis report here, it’s free.
• Digital Media & Content Platforms company Rumble (NASDAQ: RUM) fell 0.2%. Is now the time to buy Rumble? Access our full analysis report here, it’s free.
• Hardware & Infrastructure company Xerox (NASDAQ: XRX) fell 6.4%. Is now the time to buy Xerox? Access our full analysis report here, it’s free.
• Professional Staffing & HR Solutions company ManpowerGroup (NYSE: MAN) fell 2.3%. Is now the time to buy ManpowerGroup? Access our full analysis report here, it’s free.

Zooming In On Xerox (XRX)

Xerox’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 19.6% on the news that the company reported a significant loss for its second quarter and widely missed analyst profit forecasts. 

The company posted an adjusted loss of $0.64 per share, a stark contrast to the $0.07 profit analysts had predicted. While revenue slightly surpassed expectations, this earnings failure alarmed investors. The company's financial health showed clear signs of strain as its free cash flow, a key measure of cash generation, plunged to a negative $30 million from a positive $115 million in the prior year. This decline stemmed from falling gross margins, which were squeezed by tariffs and increased product costs. Revenue from the core Print and Other segment also contracted, which highlighted soft demand for the company's equipment.

Xerox is up 2.6% since the beginning of the year, but at $2.53 per share, it is still trading 74.3% below its 52-week high of $9.84 from January 2025. Investors who bought $1,000 worth of Xerox’s shares 5 years ago would now be looking at an investment worth $119.95.

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