A rebound in tech stocks to a nearly 2% gain overall helped salvage a mixed day for broader U.S. equities on a low-activity day. The S&P 500 Index improved by 0.1% and the Dow Jones Industrial Average declined marginally, but the Nasdaq Composite logged a 0.4% gain.
Heading into Tuesday’s trade, Snap Inc (NYSE:SNAP) can’t seem to shake the bears, while Barracuda Networks Inc (NYSE:CUDA) and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) are moving following late Monday announcements.
Here’s what you need to know as we enter Tuesday:
Snap Inc (SNAP)
Morgan Stanley is just piling on.
SNAP shares on Monday fell below their initial public offering price for the first time, and now Morgan Stanley has put even more downward pressure on the stock, downgrading the social company to “Equal Weight” this morning. Analysts there also dropped their price target from $28 to $16, suggesting another 6% of downside.
Snap’s most recent concern is anxiety over the expiration of the company’s lockup period. The lockup period prevents insiders from selling their shares until a few months after a company goes public, helping to keep the stock from collapsing right after hitting the market.
But fresh IPOs typically run into the lockup expiration wall roughly a month ahead of the date. MKM Partners, according to CNBC, says Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR) and LinkedIn lost 24% on average in the 30 days heading into their expirations.
The primary concern driving Snap’s stock lower for months, of course, isn’t the lockup date, but worries that Facebook’s Instagram is cutting heavily into social media service Snapchat’s growth. That, combined with a decided lack of profitability, has investors worried that Snap could end up being more Twitter than Facebook. Yet despite this, SNAP trades for more than 30 times sales — almost eight times more than the average S&P 500 company.
SNAP stock is off by about 4% in Tuesday’s early trade.
Barracuda Networks Inc (CUDA)
CUDA shares are on the decline this morning despite a Street-meeting earnings report for its fiscal Q1.
The cybersecurity company posted earnings of 18 cents per share on a non-GAAP basis, matching the consensus estimate. On a GAAP basis, the company still managed to post a 5-cent profit.
The security and data provider also revealed revenue of of $94.2 million, which came in ahead of the $91.2 million that analysts polled by Thomson Reuters predicted.
Quarterly gross billings for its first quarter tallied up to $105.2 million, which which was higher than the $98.2 million Barracuda Networks posted in the year-ago period.
CUDA shares are off 4% this morning, which will cut into the stock’s outperformance year-to-date. Prior to this morning’s decline, Barracuda Networks had logged roughly 12% gains.
Arena Pharmaceuticals, Inc. (ARNA)
Arena Pharmaceuticals reported positive results from its hypertension drug in a clinical trial, resulting in a massive surge in ARNA shares.
ARNA’s drug, called ralinepag — designed to treat pulmonary arterial hypertension, which causes high blood pressure in the lungs — helped patients at a much higher rate compared to the baseline in a Phase 2 study.
Arena Pharmaceutical’s study examined 61 patients, with those treated with ralinepag experiencing a 29.8% greater improvement than patients in a placebo group.
The figure was 20.1% when compared with baseline.
“It is exciting to see the positive nonclinical pharmacological profile translating into potentially the first oral prostacyclin therapy that may approach consistent therapeutic levels without the complexity of parenteral (IV) therapy,” said Preston Klassen, M.D., MHS, Executive Vice President, Research and Development and Chief Medical Officer of Arena.
ARNA stock is rocketing by more than 40% in early Tuesday trade.
