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The Q2 Earnings Season Shooting Gallery

Quick-draw investors are turning stocks into Swiss cheese


This earnings season can be summed up in just one word:


A big factor for the wreckage has been the slowing of the global economy — something that’s not just showing up on the past quarter’s bottom lines, but also in falling forecasts. But more importantly, despite plenty of warning that things were going to be ugly, investors have been turning on a dime the second bad earnings news is churned out.

You know things are bad when even Apple (NASDAQ:AAPL) can’t catch a break. Normally an earnings-season fireworks display, Apple wasn’t able to show enough growth earlier this week — a 21% improvement just didn’t cut it — and the Street gave Apple a decent 4% haircut.

Luckily for Apple, that was the worst of it. A number of other stocks have taken considerable baths in the past couple weeks on bad, middling … even good news. Here’s a look at a few companies investors were quick to pull the “sell” trigger on:

Starbucks (NASDAQ:SBUX): Starbucks’ second-quarter report was a bit of a shocker. It didn’t miss by much — earnings of 43 cents per share and improved revenues of $3.3 billion were shy of estimates for 45 cents and $3.33 billion — but fourth-quarter guidance was weaker than forecasts given a month ago, too. Starbucks is feeling the pain of the global slowdown, especially in Europe. And while that’s a well-known theme at this point, investors have been no more merciful, sending SBUX down by about 9% Friday.

Facebook (NASDAQ:FB): Investors already were bracing for bad news ahead of Facebook’s Thursday earnings report. And they got it — sort of. The earnings report itself was not that bad. Facebook reported a 32% increase in revenues to $1.18 billion, it suffered an expected loss of $157 million, and EPS of 12 cents were right on line with Street expectations. But Facebook provided no guidance for the next quarter or the full year — a troubling absence when investors remain concerned about FB’s ability to monetize its rapidly growing mobile business. As a result, the stock was off almost 12% Friday.

Chipotle Mexican Grill (NYSE:CMG): Growth doesn’t last forever — and when it starts to slow, investors get jittery. Such was the lesson taught to Chipotle when it reported its second-quarter earnings last week. Revenues climbed by 21% — and that was put to shame by earnings that were 61%. But those results weren’t what Wall Street wanted — specifically, revenues fell about 15 million shy of estimates — and CMG shares plunged 22%.

Zynga (NASDAQ:ZNGA): Social gamemaker Zynga came public in December 2011, and since then, it has been a wild ride, including a continuous steep plunge for the past couple months. The cap came Wednesday when Zynga announced it had swung to a loss and dropped full-year guidance by roughly 75%, sending the stock plunging 38% in Thursday trading. The company gets most of its money by selling digital items in its social games. While it is a billion-dollar business, Zynga has come under pressure as it has failed to produce new breakout games and is struggling with the transition to mobile

Green Dot (NYSE:GDOT): Green Dot, a pioneer of the pre-paid debit-card market, was being taken to the woodshed Friday on disappointing earnings and guidance. While revenues were up a healthy 19% from the year-ago period, earnings actually fell 17% amid pricing pressures caused by growing competition, and adjusted EPS of 35 cents came in 3 cents under the consensus mark. Guidance is what really killed GDOT, though — the company reduced full-year earnings forecasts of $1.65 to $1.70 to a range of $1.29 to $1.32. Investors headed for the exit aisles, sending GDOT shares down roughly 60% near the end of Friday trading.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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