With the first-quarter earnings season thus far sending a message that’s more bearish than bullish, stocks were once again lackluster despite the modestly bullish start to the session. By the time the closing bell rang, the S&P 500 was at 2050.63, down 0.02%, as traders had no encouraging news to latch onto.
Thursday wasn’t a mild session for every name out there though. Leading the bearish parade were Fitbit Inc (NYSE:FIT), L Brands Inc (NYSE:LB) and Tesla Motors Inc (NASDAQ:TSLA).
Here’s a closer look at why all of them were doomed from the onset of Thursday’s action.
Fitbit Inc (FIT)
Ballyhooed-but-beleaguered smartwatch company Fitbit dropped a bomb on FIT shareholders today, posting Q1 earnings that were satisfactory enough, but offering Q2 guidance that failed to impress.
Last quarter, Fitbit earned 10 cents per share on sales of $505.4 million, handily topping expectations of a profit of only 2 cents per share and a top line of $443.3 million. Plans for big spending in the second quarter are going to take a big toll on the bottom line, however. The company only anticipates a profit of between 8 and 11 cents for the current quarter, versus analyst expectations of 26 cents.
Wall Street still (mostly) likes the product and its potential. But, FIT shares still fell a whopping 19% today because (as Jim Cramer put it), CEO James Park “has no clue how to play Wall Street,” alluding to Park’s inability to manage expectations in the most positive light.
L Brands Inc (LB)
Victoria’s Secret parent company L Brands failed to live up to its Q1 sales expectations, and LB shares paid the price for it in the form of a 12% tumble on Thursday.
The official SEC filing for the retailer’s first quarter has yet to be submitted, but in a preliminary announcement delivered today, LB shareholders learned last quarter’s earnings would roll in somewhere between 50 and 55 cents per share on a mere 1% increase in April’s same-store sales.
Analysts had been modeling a profit of 58 cents per share of LB, and a same-store sales improvement of 4.8% for last month.
The news prompted Piper Jaffrey to downgrade its opinion of L Brands from Neutral to Underweight.
Tesla Motors Inc (TSLA)
Last but not least, for a little while after yesterday’s close, during Wednesday’s after-hours trading, it looked like Tesla Motors shares were gearing up for a bullish post-earnings report Thursday. Having had a night to sleep on it though, TSLA shareholders decided the glass was half-empty after all, sending the stock down another 5% today.
The knee-jerk bullishness TSLA shares saw late Wednesday stemmed from the electric car maker’s first quarter report. The loss was smaller than expected, and the company continued to grow the top line. The most celebrated detail unveiled with the Q1 report was an accelerated timeline to reach an annual production rate of 500,000 vehicles.
CEO Elon Musk says Tesla is going to make it happen in 2018 rather than reaching that pace in 2020 as originally planned.
After the dust settled today though, TSLA owners left facing the stark flipside of the ambitious goal — Tesla Motors likely won’t be able to reach that pace of production by 2018, and even if it does, it’s going to cost someone a considerable fortune to fund such an expansion.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
