As much as the bulls tried to get the market back in the black in the latter half of the day after a horrendous start, it just wasn’t in the cards. The S&P 500 closed at 2,394.44 on Thursday, down 0.21%, and peeling the market away from record-high territory.
That was nothing compared to the baths Straight Path Communications Inc (NYSEMKT:STRP), Symantec Corporation (NASDAQ:SYMC) and Snap Inc (NYSE:SNAP) took today. Here’s a closer look at why their investors had to look away from their trading screens for the better part of the day.
Snap Inc (SNAP)
Snapchat parent company Snap reported its first ever quarterly results after Wednesday’s close. They were lackluster, but the response from SNAP shares was downright horrifying. Snap stock closed a whopping 21.5% lower today, with a wide swath of investors suddenly realizing the company won’t likely be living up to its hype anytime soon, if at all.
For the quarter ending in March, the messaging service generated $150 million in revenue, and boasted a daily user count of 166 million. Problem: Analysts were modeling a daily active user tally of 168 million and $158 million in revenue.
Several analysts came to its defense. Morgan Stanley’s Brian Nowak was one of them, saying the firm will “remain bullish about SNAP’s rising engagement and the monetization potential of its user base” and that “We are buyers on weakness (approaching IPO levels) and see execution into 2Q:17 as the next critical signpost.”
Goldman Sachs, which helped underwrite the IPO, also remained in the bullish camp. Analyst Heath Terry explained “While SNAP remains a near venture stage investment with all of the risks that implies, we continue to believe its audience and engagement represent a unique asset that will benefit from growth and diversification of internet usage and advertiser adoption as both mature.”
Traders didn’t buy into either rationalization though.
Symantec Corporation (SYMC)
Although it pales in comparison to the drubbing SNAP shares took today, on any other day, the 5.1% setback suffered by Symantec shareholders on Thursday would have been the stuff of headlines.
Symantec, which mostly offers cybersecurity products, managed to meet its fiscal Q4 earnings results, but last quarter’s revenue fell short of expectations. Its profit guidance wasn’t all that exciting either.
The specifics: In its fiscal fourth quarter, Symantec earned 28 cents per share on revenue of $1.12 billion. The bottom line was well up from the year-ago profit of 22 cents per share of SYMC stock, and the top line grew 28%. Earnings were in line with estimates, but those same analysts were calling for sales of $1.18 billion.
Perhaps the crux of the day’s selloff was driven by the company’s Q1 and full-year outlook. Both were short of the numbers analysts had been collectively expecting.
Straight Path Communications Inc (STRP)
Last but not least, Straight Path Communications served up a sobering reminder today that buying a stock simply because it’s in the middle of a bidding war doesn’t always mean it’s going to bear as much fruit as suspected.
In early April, telecom giant AT&T Inc. (NYSE:T) announced its intentions to acquire wireless telecom technology company Straight Path Communications. For several days it looked like AT&T’s offer of $95.63 per share would be the one and only bid. On Monday of this week, however, Verizon Communications Inc. (NYSE:VZ) it was also bidding for Straight Path, offering $184 per share.
Traders presumed a bidding war would ensue, with the market carrying STRP to a high of $235.68 on Tuesday. That was a big mistake. As it turns out, AT&T isn’t interested in getting to such a bidding war, and the best price is going to be Verizon’s offer of $184. The 20.4% plunge STRP made today merely brings the stock back to its ultimate sale price.
As of this writing, James Brumley held a long position in AT&T (T).