While Wednesday’s gain wasn’t enough to put the possibility of a renewed rally on the radar, Thursday’s follow-up gain forces traders to at least consider the possibility. Today’s advance was largely spurred by expectations that the European Central Bank was going to become a little more aggressive with its stimulus effort.
Not every stock was celebrating, though. Insulet Corporation (PODD), GoPro Inc. (GPRO) and Apollo Education Group Inc. (APOL) were all deep into the red today, for crystal clear reasons.
GoPro (GPRO)
The good new: GoPro is definitely going to enter the European and Chinese markets. The bad news: It’s not going to happen quite as soon as most investors were expecting.
GoPro CFO Jack Lazar is in attendance at this year’s Consumer Electronics Show, at which he confirmed to Citigroup’s Ehud Gelblum that the wearable-camera maker was working to develop a direct distribution model in Europe; the entry into China was already a given. But Lazar also made a point of explaining that foreign expansion would take time. The bears took that ball and ran with it, sending GPRO stock down nearly 4% on Thursday. The week-to-date selloff has now reached 10%.
Although most of the bearish rhetoric surrounding Lazar’s comment felt short-term in nature, not every investor or analyst is convinced the company is just facing a short-term impasse. Pacific Crest’s Brad Erickson commented:
“Despite likely upside to GoPro’s Q4 and Q1, valuation keeps us sidelined and somewhat skeptical of sustainable stock appreciation that near-term hardware could drive.”
Apollo Education Group (APOL)
Just when it looked like the for-profit education sector was stabilizing and Apollo Education Group was back on a growth track, some stark numbers came along to pull the rug out from underneath APOL stock.
Giving credit where it’s due, Apollo Education Group did top earnings expectations of 42 cents per share, earning 44 cents per share for its first fiscal quarter. On the other hand, revenues were shy of expectations and profits still fell by 66%, mostly on the heels of falling enrollment. Total enrollment at University of Phoenix — its primary division — slumped 14%, with new enrollments falling 5%.
It was alarming enough to send APOL stock lower by more than 13%.
Insulet (PODD)
Insulin infusion system manufacturer Insulet Corporation isn’t going to do as well in the fourth quarter as first thought.
This morning, Insulet lowered its Q4 guidance, from an initial revenue outlook of something between $76 million and $81 million to a top line of somewhere between $71 million and $73 million. The consensus sales estimate for the fourth quarter had been $79.56 million.
The pessimistic revision reflects a delay in shipments of no-insulin drug delivery goods, which are now going to be shipped in the first quarter of the new year rather than the last quarter of the previous fiscal year.
While it’s unclear if the decision was related to the delay (and unclear exactly who or what prompted the decision), Insulet Corporation Chief Commercial Officer Peter Devlin also announced his resignation on Thursday, sending shares further downstream en route to a 9% loss.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
