The initial bullish response to a solid employment report for November didn’t last very long. By the time the closing bell rang for the day (and the week), the S&P 500 was back to 2,191.95, up a mere 0.04% for the session.
It could have been worse, however, and for owners of Smith & Wesson Holding Corp (NASDAQ:SWHC), Ambarella Inc (NASDAQ:AMBA) and Sirius XM Holdings Inc. (NASDAQ:SIRI), it was worse. These three names used far more than their fair share of red ink on Friday.
Here’s what went wrong for each.
Sirius XM Holdings Inc. (SIRI)
It may have been welcome news for owners of Pandora Media Inc (NYSE:P), but for Sirius XM Holdings, not so much.
After a handful of misfires in the past, online music venue Pandora Media may finally be acquired. The suggested buyer? Satellite radio named Sirius XM Holdings. It’s only rumor at this point, but coming from CNBC’s David Faber, it’s a fairly credible rumor.
Problem: SIRI shareholders aren’t so sure it’s the best move at this time. Pandora isn’t profitable, and it doesn’t look like it’s going to be anytime soon. Melding it with Sirius opens the door to new product and cross-selling possibilities, but Sirius XM already has an internet-based option and doesn’t necessarily need another one.
The 16.1% rally from P shares confirms Pandora shareholders are glad to have the prospective out, but the 5.6% drop for SIRI today says Sirius shareholders aren’t thrilled about the idea.
Ambarella Inc (AMBA)
Last quarter was healthy enough for technology outfit Ambarella. But, AMBA shareholders were less than pleased with the company’s outlook, sending the stock lower to the tune of 11.3%.
For the recently completed third quarter, the company earned $1.11 per share on sales of $100.5 million. Analysts were only calling for a bottom line of 94 cents per share of AMBA and revenue of $97.3 million.
The quarter currently underway could be relatively disappointing though. Ambarella now anticipates a top line of between $84 million and $87 million for the fourth quarter of the year, falling short of the average analyst estimate of $90.3 million.
A significant piece of Ambarella’s business — 30% during the third quarter — continues to be driven by GoPro Inc (NASDAQ:GPRO), which just unveiled that it was shutting down its media arm, and would subsequently be cutting 15% of its staff. It could be a sign that the company is facing trouble with its core camera business as well.
Smith & Wesson Holding Corp (SWHC)
Finally, gunmaker Smith & Wesson put up some respectable fiscal Q2 numbers, but its outlook for its third quarter of the year missed the target … badly.
Last quarter, Smith & Wesson Holding earned 68 cents per share on sales of $233 million. The top line was better than the $227 million the pros had been calling for, but the bottom line was considerably better than forecasts for income of 57 cents per share of SWHC.
Still, the future doesn’t look terribly bright, for a variety of reasons. Trump winning the Presidency over Clinton was one of them. Wunderlich Securities analyst Rommel Dionisio explained:
“Given much more difficult y/y comparisons in NICS data beginning in Dec., the sluggish start to hunting season given warmer than usual autumn weather through much of the country, and significant dealer and distributor inventory stocking prior to the election (which incorrectly assumed a Clinton win), we believe order patterns and shipment levels for both the firearms and accessories segments for Smith & Wesson could soon begin to slow.”
SWHC closed 12% lower on Friday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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