What Happened?
A number of stocks fell in the morning session after an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.
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:
- Home Builders company KB Home (NYSE: KBH) fell 3.3%. Is now the time to buy KB Home? Access our full analysis report here, it’s free.
- Renewable Energy company First Solar (NASDAQ: FSLR) fell 3.2%. Is now the time to buy First Solar? Access our full analysis report here, it’s free.
- Renewable Energy company Nextracker (NASDAQ: NXT) fell 3.3%. Is now the time to buy Nextracker? Access our full analysis report here, it’s free.
- Internet of Things company SmartRent (NYSE: SMRT) fell 3.3%. Is now the time to buy SmartRent? Access our full analysis report here, it’s free.
- Building Material Distributors company Boise Cascade (NYSE: BCC) fell 3.3%. Is now the time to buy Boise Cascade? Access our full analysis report here, it’s free.
Zooming In On SmartRent (SMRT)
SmartRent’s shares are extremely volatile and have had 49 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 previous big move we wrote about was 8 days ago when the stock gained 18.7% on the news that the company reported second-quarter results that showed strong growth in its subscription business and aggressive cost-cutting measures, which outweighed a drop in total revenue. The smart-home technology provider's total revenue fell 21% to $38.3 million, a result of a planned shift away from selling bulk hardware. However, investors focused on the 11% increase in Annual Recurring Revenue, which reached $56.9 million and signaled strength in its software subscription model. SmartRent also expanded its cost reduction program, targeting $30 million in yearly savings. The company stated a clear goal to achieve cash flow neutrality by the end of 2025, a move that reassured investors about its financial discipline. Despite a wider net loss for the quarter, the positive outlook on recurring revenue and cost management propelled the stock higher.
SmartRent is down 24% since the beginning of the year, and at $1.33 per share, it is trading 32.1% below its 52-week high of $1.96 from November 2024. Investors who bought $1,000 worth of SmartRent’s shares at the IPO in February 2021 would now be looking at an investment worth $119.82.
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