Investing

6 Serious Earnings Disappointments That Smacked Shareholders

Jon C. Ogg

Published: November 10, 2015 2:58 pm

Last Updated: January 13, 2020 5:19 pm

Tuesday’s trading session mixed after having been lower, so the markets are trying to snap the recent losing streak. Many companies are still reporting third quarter earnings, and some of these companies are turning in earnings that just really are missing the bar.

24/7 Wall St. has tracked six big stock movers to the downside after earnings or guidance. We are also seeing huge volume spikes in these names. Included with each summary is how bad each report looked, or what other problems were seen, as well as trading color on each downside mover.

Aegerion Pharmaceuticals Inc. (NASDAQ: AEGR) lost almost $10 million after items, but net product sales of $67.3 million generated $14.7 million of cash in the third quarter. The trick is JUXTAPID is being managed through volatile market dynamics associated with the introduction of PCSK9 inhibitors. Aegerion also said that it was currently in default on its outstanding $25 million term loan with Silicon Valley Bank.

Aegerion shares were soft ahead of Monday afternoon’s earnings report with close to a 20% drop to $$13.12, and Tuesday’s post-earnings reaction was down another 22% to $10.19 in afternoon trading. The 4.3 million shares with almost 90 minutes left in the day was about 7 times a full day’s normal volume.

The Gap, Inc. (NYSE: GPS) has actually done better than its initial indications might have led investors to believe. A 15% drop in Banana Republic sales and a 4% drop in comparable Gap global sales were not offset by only a 2% gain in Old Navy global sales. Net sales fell to $1.2 billion from $1.26 billion in the prior year’s month of October, and quarterly sales were down by 3% at $3.86 billion.

Gap claimed that a constant currency basis would have made sales flat in the quarter. Gap shares were last seen down 3% at $26.85, but the stock was as low as $26.00 earlier on Tuesday and that is only 3 cents above a 52-week low.

ALSO READ: Watch for a Supply Chain Spillover at Apple

SunEdison, Inc. (NYSE: SUNE) posted a wider loss and then there were words of liquidity concerns as the company is seeking cash. SunEdison shares were last seen down 20% (or $1.56) at $5.84. The stock even hit a 52-week low of $5.59 on the day, versus a 52-week high before the spin-out plays of $33.45. Despite the drop, SunEdison has a $1.85 billion market cap. Keep in mind that the share volume was over 90 million shares with over 90 minutes left in the day. SunEdison CEO Ahmad Chatila did note difficulties around the Yieldco model. He said:

In addition, we made the difficult, but necessary decision to optimize our organization in the face of the current market conditions within the yieldco space. These changes will not only set up the business for long-term success, but also should position the development business to generate positive cash flow in mid 2016.

Textura Corporation (NYSE: TXTR) was down 21% at $23.20 and the volume of 2.15 million shares was already more than 14 times normal volume. The provider of collaboration solutions for the construction industry posted a 38% revenue gain to $22.5 million and a 39% bookings gain to $26.1 million, but that was short of estimates and the guidance for revenue and earnings were soft in the fourth quarter. Textura took at least two downgrades from analysts this morning and the 52-week low of $22.51 was also today — versus a 52-week high of $31.23.

Turtle Beach Corporation (NASDAQ: HEAR) was supposed to be the next best thing in gaming peripherals for awesome headsets, but Monday afternoon’s earnings growth came with cautious commentary about currency and slowing investment from Europe, Australia, and China. Turtle Beach shares were last seen down 18.7% at $2.09, with a 52-week range of $1.75 to $4.64.

This shows the risks of chasing stocks were analysts think the stock will double or more. Turtle Beach has also transitioned its manufacturing to Foxconn and it is seeing higher margins. That may not be enough here, but CEO Juergen Stark said:

We continue to execute on the critical areas of our business that we expect will drive sustained growth and improved profitability. We delivered strong revenue growth and gross margin expansion as sales of our next generation headsets, several of which feature first and only innovations, increased by 69% from the third quarter last year. Year-to-date, these headsets have generated a gross margin over 1,000 basis points higher than our previous generation models. We have largely completed the transition of our product portfolio from previous gaming console generation models, emerging with an industry-leading portfolio for next gen consoles.

Amaya, Inc. (NASDAQ: AYA) is unheard of to most investors, but the technology provider for global gaming and interactive entertainment segments gave earnings mostly in-line with estimates — at least without considering guidance. Amaya sees earnings per share potentially 10% light against estimates. The company said that its customers in Europe have undergone approximate a 19% decline in the purchasing power due to the currency. Amaya was last seen down over 35% at $15.12 and the 1.6 million shares was about 16 times normal trading volume.

The quote from David Baazov, Amaya’s Chairman and CEO, does not sound like much is going wrong:

Since Amaya’s acquisition of its B2C business, we have consistently delivered shareholder value. And, despite multiple recent global challenges to our core business, we believe we are well positioned to increase our cash flow and continue to grow our customer base in 2016 through a number of initiatives.

There were seven similar movers which moved handily lower on Monday: CommScope, EV Energy, Hertz, Kandi Tech, Plug Power, Priceline, and Horsehead Holdings. Also, eight companies that destroyed shareholders last week were Bluebird Bio, Chipotle, FireEye, Groupon, Iconix, Men’s Wearhouse, Qualcomm, and Time Warner.