Fueled by encouraging November sales figures from General Motors Company (GM) in addition to relieving Cyber Monday sales numbers from Wal-Mart Stores, Inc. (WMT), investors shrugged off Monday’s setback for stocks on Tuesday, pushing the S&P 500 back up by about 0.65% to a close of 2066.55.
Not every stock participated in the marketwide advance, however. In fact, Globalstar, Inc. (GSAT), Mattress Firm Holding Corp. (MFRM), and Genworth Financial Inc. (GNW) each lost a notable amount of ground.
Mattress Firm Holding (MFRM)
The weight of the 65% rally shareholders of Mattress Firm Holding had enjoyed year-to-date finally proved to be too much to sustain, as MFRM stock pulled back nearly 8% on Tuesday.
The spark for the selloff was last quarter’s results, which were OK in terms of comparisons and estimates, but disappointing to investors who were hoping for more than just OK. The mattress-maker earned an operating profit of 70 cents per share of MFRM stock, in line with estimates, on $464.3 million in sales. Analysts were only looking for a top line of $430.5 million, on average.
Although nobody explicitly said it, the market may be concerned about heavy spending on acquisitions. More likely, though, current owners were planning to take profits on their MFRM position regardless of what sort of guidance (which was raised on most fronts, by the way) Mattress Firm Holding offered.
When it rains, it pours … at least for Globalstar. Just when it looked like GSAT stock was going to reclaim a big piece of the 56% loss it suffered over the course of early October, the bears growled again, sending shares down to the tune of more than 6% today. The Globalstar pullback from late November’s high has now reached 13%, leaving GSAT back below its 20-day moving average line, putting the entire rebound effort in question.
Don’t look for a specific new catalyst — there wasn’t one. The market just has too many doubts about the company’s future, and is expressing this concern selling shares fairly indiscriminately.
Genworth Financial (GNW)
Unlike Globalstar, there’s a crystal clear reason Genworth Financial shares tanked on Tuesday. JPMorgan Chase said the stock is only worth $11 per share, down from its prior price target of $18 for the insurer’s stock. GNW stock slumped nearly 6% on the heels of the announcement, falling all the way below $9 per share.
JPMorgan analyst Jimmy Bhullar explained:
“We feel that Genworth’s reserve hole is significantly larger than the upcoming charge. Given the company’s limited disclosure on its in-force block, as well as significant management discretion in setting assumptions for reserve analysis, we consider projecting the charge with precision an exercise in futility.”
Whatever the reason, GNW stock is down 44% year-to-date.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.