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:

• Digital Media & Content Platforms company WEBTOON (NASDAQ: WBTN) fell 1.8%. Is now the time to buy WEBTOON? Access our full analysis report here, it’s free.
• Industrial & Environmental Services company Pitney Bowes (NYSE: PBI) fell 3.3%. Is now the time to buy Pitney Bowes? Access our full analysis report here, it’s free.
• IT Services & Consulting company IBM (NYSE: IBM) fell 3.2%. Is now the time to buy IBM? Access our full analysis report here, it’s free.
• IT Services & Consulting company DXC (NYSE: DXC) fell 1.8%. Is now the time to buy DXC? Access our full analysis report here, it’s free.
• Professional Staffing & HR Solutions company First Advantage (NASDAQ: FA) fell 4%. Is now the time to buy First Advantage? Access our full analysis report here, it’s free.

Zooming In On First Advantage (FA)

First Advantage’s shares are quite volatile and have had 16 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 3 months ago when the stock gained 9.8% on the news that the company reported third-quarter financial results that surpassed analyst expectations and provided an encouraging full-year outlook. 

The background screening services provider posted revenue of $409.2 million for the quarter, a significant 105% year-on-year jump that beat Wall Street's forecast. Adjusted earnings were $0.30 per share, also topping estimates. 

In addition to the strong quarterly performance, First Advantage raised its guidance for the full year 2025. The company announced it now expects revenues with a midpoint of $1.55 billion and adjusted earnings per share with a midpoint of $1.00. This update signaled management's confidence in the business's trajectory.

First Advantage is up 1.7% since the beginning of the year, but at $14.50 per share, it is still trading 27.6% below its 52-week high of $20.01 from February 2025. Investors who bought $1,000 worth of First Advantage’s shares at the IPO in June 2021 would now be looking at an investment worth $735.79.

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