Not even a strong GDP growth reading and dirt-cheap oil prices could wake the market up today. The nation’s economy likely grew at a 3.9% clip in Q3, rather than the previously-assumed 3.4%. Yet stocks barely budged on Tuesday, with many traders already distracted by thoughts of Thursday’s feasts.
A handful of individual stocks did manage to draw at least a small selling crowd, though, with Casey’s General Stores Inc. (CASY), Pandora Media Inc. (P), and Workday Inc. (WDAY) leading the worst of the worst major performers on Tuesday.
Pandora Media (P)
Although Pandora Media shares managed to recover rather well from a 7.4% intraday dip on Tuesday, the close of $19.31 was still more than 2% off Monday’s close, and P stock is still down more than 50% from its march peak.
Tuesday’s contribution to the long-term beat-down was a downgrade. FBR Capital Markets changed its stance on the streaming music stock from “market-perform” to “underperform,” lowering the price target for P stock from $28 to $11 in the process. At the heart of the cut is concern that Pandora’s music licensing costs are going to rise once the Copyright Royalty Board determines performance fees for the next few years.
Workday (WDAY)
Cloud-based business software coder Workday is on the right track, though investors were unimpressed with last quarter’s results when they were released Monday after the close. The adjusted loss per share of WDAY was whittled down from 12 cents in Q3 of 2013 to only a 3 cent loss in its most recently-reported accounting period, on the heels of a 68% increase in revenue. Both were better than estimates.
Its guidance, however, just wasn’t compelling enough. Workday “only” expects 40% sales growth in the coming fiscal year.
Not all analysts are convinced Workday needs to be so conservative, however. As Cantor Fitzgerald’s Brian White wrote, following the announcement:
“Despite Workday’s strong Q3 fiscal 2015 results, which decisively beat our revenue projection, the company’s conservative Q4 fiscal 2015 revenue outlook and expectation for 40% sales growth in fiscal 2016 drove an after-hours sell off in the shares. We believe this reaction is shortsighted. Our enthusiasm around the Workday story remains unfettered, given another strong quarterly performance and our optimism around the company’s long-term growth prospects, combined with our appreciation for Workday’s conservatism when approaching a new fiscal year.”
Whatever the case, WDAY stock fell more than 5% on Tuesday.
Casey’s General Stores (CASY)
If you want proof it always pays to double-check your math, just take a look at what happened to shares of Casey’s General Stores on Tuesday. CASY stock took an 8% hit today when the retailer announced it made accounting errors that understated its tax liability for a period of nearly three years.
As a result of the correction, Casey’s General Stores now owes an additional $31 million to the IRS. That figure represents roughly 4.5 cents for every outstanding share of CASY stock. For perspective, the company earned $3.46 per share in its most recently-completed fiscal year.
Making matters worse, shortly after the accounting error bomb was dropped, a law firm announced it would be investigating Casey’s General Stores for possible securities law violations.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
