Markets
HPQ

Why HP Inc. Fell 53% in November

Image source: HP, edited by the author.

What: Shares of HP fell 53.5% in November, according to data from S&P Capital IQ . Any stock chart service will give you the same hair-raising plunge. But of course, there's a perfectly reasonably explanation for this. The old HP is now two separate businesses , and these simple charts and figures don't take the new Hewlett-Packard Enterprise ticker into account.

So what: Hewlett-Packard Enterprise sprung into existence at the very start of November, in the tax-free form of a share dividend paid out to current HP shareholders.

The Silicon Valley beast was no longer a single entity with a $50 billion market cap, but two smaller operations with individual market caps in the $20 billion to $30 billion range.

Through a few ups and downs along the way, both of the new HP stocks ended November roughly 5% higher than their monthly opening levels. That was enough to beat the S&P 500 market index, which traded roughly sideways during this period.

And nobody lost 50% here. It's a mirage, but one etched into HPQ's stock charts forevermore.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Now what: At one point, Hewlett-Packard Enterprise was lagging behind the markets and its corporate sibling while HP raced ahead to a 20% November gain. Fourth-quarter results quickly brought the consumer-oriented stock down to earth while boosting the enterprise operation, bringing everyone back to square 1.

If nothing else, that report reminded shareholders how little things had really changed from the single-ticker days. As CEO of one company and chairman of the other, Meg Whitman still pulls all the strings here. More than $1 billion of the two companies' $26.4 billion in total sales came from inter-segment transactions, meaning that 4% of HP's business was funded by other HP units.

The two companies should eventually start drifting apart -- if Whitman will allow it. That's the real test of how effective this business split really was. For now, it's very much business as usual, and that's not a compliment at all .

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Why HP Inc. Fell 53% in November originally appeared on Fool.com.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

HPQ

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More