Encouraging home sales news and muted inflation offered something of a reprieve for the bulls on Thursday, with the broad market making a modest gain. Existing home sales hit a multi-month high pace of 5.26 million units, and the inflation rate still stands at a palatable 1.66%.
Nevertheless, it wasn’t all good news for stocks. Mobileye NV (MBLY), GoPro Inc. (GPRO), and Keurig Green Mountain Inc. (GMCR) all dipped pretty deeply into the red ink for a myriad of reasons.
GoPro (GPRO)
Wearable video camera maker GoPro saw its stock take a big hit today following the unveiling of the details of its upcoming secondary offering.
The new shares will be issued at a price of $75 each, generating approximately $800 million in proceeds. Existing shareholders aren’t fans of the terms of the offering though, judging from the 9% loss GPRO stock suffered in the wake of the news.
The steep selloff was most likely spurred by the fact the secondary offering price of $75 per share of GPRO stock was actually less than the market price as of Wednesday when the secondary offering’s details were posted. The market’s protest, however, pulled GoPro shares all the way down to a close of $71.74.
Keurig Green Mountain (GMCR)
Keurig Green Mountain may have topped its fourth quarter and full-year expectations, but it still wasn’t enough to appease investors.
For the fourth fiscal quarter of the year, sales grew 14%, and the company posted a profit of 90 cents per share of GMCR stock versus an average analyst outlook of only 77 cents.
The part of the report the market didn’t care for was a seemingly tepid outlook. Keurig Green Mountain says it’s only looking for single-digit sales growth for the first quarter (currently underway), which would translate into earnings of somewhere between 83 and 88 cents per share of GMCR stock. The consensus estimate for Q1 was 96 cents.
Shares of GMCR stock fell more than 7% on the news.
Mobileye NV (MBLY)
What started out as a very good day for Israeli computer chip maker Mobileye NV quickly turned into a rather bad day, with MBLY stock closing lower by nearly 6%.
Shares opened 5.8% higher on Thursday following a third-quarter earnings report from Mobileye NV that topped analyst estimates for the top and bottom line. Revenue was up 70%, and income grew 23%. Moreover, the company projected full-year income of 20 cents per share of MBLY stock, versus analyst expectations of only 19 cents.
So why the tumble? This is a prime example of a “buy the rumor, sell the news” scenario. Potential profit-takers had a chance to lock in gains, so they did, and they didn’t stop until MBLY was deep in the red. It should be noted, however, that some of these profit-takers may be the initial buyers who have been waiting for a chance to get out for a while. Mobileye NV only went public in August, and even with today’s dip MBLY stock is at profitable levels for the initial owners.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
