Investing

6 Serious Earnings Disappointments That Smacked Shareholders

Jon C. Ogg

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.

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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.