8 Companies That Have Seriously Damaged Prospects for Investors
Pandora Media Inc. (NYSE: P) opened up the sins of the world again, for investors this time. The online music service reported earnings on Thursday of $0.09 per share and $239.6 million in revenue, against consensus estimates of $0.08 in earnings per share and revenue of $238.50 million. For the 2014 full year, the company gave guidance of $0.19 to $0.21 in earnings per share and $912 million to $917 million in revenue, which compares to consensus estimates of $0.18 per share in earnings and $911.58 million in revenue. Prior to the drop, this valued Pandora at over 100 times earnings for 2014 and almost 50 times expected 2015 earnings.
Following this news, the stock fell to a new 52-week low of $19.35 on Friday, before closing down 13.5% at $20.00 even. Investors have to wonder if this valuation for slowing growth and a business model that could be at risk is worth the massive premium now. Its stock has a consensus analyst price target still up at almost $32, and the new 52-week trading range is $19.35 to $40.44. Now that Pandora’s shares have been cut in half, that is a sting that will burn many investors, potentially for years to come, even if the stock recovers from the current lows.
3D Systems Corp. (NYSE: DDD) did not formally release earnings, but on Wednesday it lowered guidance to $0.16 to $0.19 in earnings per share and $164 million to $169 million in revenue. This was against consensus estimates of $0.21 in earnings per share and revenue of $186 million. For the full year, the company gave guidance in earnings of $0.70 to $0.80 per share, as well as $650 million to $690 million in revenue. That compares to consensus estimates of $0.78 in earnings per share and just over $707 million in revenue.
What investors have to come realize, perhaps even long before this earnings confession, is that they just bid up the promises for 3D printing growth far too high. Bubbles happen, and the 3D printing bubble valuation has come and gone. 3D Systems closed down almost 12% to $36.67 on Wednesday, after closing the previous Friday at $41.55. This Friday’s close was $37.07. The analyst at Oppenheimer stepped into this vortex hours before the company issued its guidance. The consensus analyst price target for the stock is $49.25, and it has a 52-week trading range of $36.17 to $97.28.
Yelp Inc. (NYSE: YELP) may have seen its name unofficially changed to “Whimper” this week. The reviews site reported earnings on Wednesday of $0.05 per share on $102.5 million in revenue. Consensus estimates were for $0.03 in earnings per share and $99.00 million in revenue. For the 2014 full year, the company gave guidance of $375 million to $376 million in revenue, compared to consensus estimates of $0.09 in earnings per share and $375.2 million in revenue.
A search algorithm change in Google was a culprit, but what if Google decided to have this service on its own or to limit Yelp from search? Following Yelp’s earnings news, the stock closed down almost 15% to $57.17 on Thursday since the close the previous Friday at $67.09. This Friday’s close included a recovery of nearly 4% to $59.42 as analysts may have provided support, against a 52-week trading range of $49.11 to $101.75. The problem is that Yelp has to blow out estimates because it is valued at almost 500 times this year’s expected earnings and at 150 times next year’s expected earnings.
A montage of charts has been included from StockCharts.com to show how damaged these stocks have become (click to enlarge).