Stocks may have started the day in the black, hoping to kick-start the bullishness that couldn’t get any traction on Monday on the heels of news that Emmanuel Macron was — as expected — elected President of France. Once again though, the effort petered out pretty quickly, and even turned into a loss by the time the closing bell rang. The S&P 500’s close of 2,396.92 was 0.10% lower than Monday’s last trade.
It was even worse for owners of Hertz Global Holdings, Inc (NYSE:HTZ), Pandora Media Inc (NYSE:P) and Discovery Communications Inc. (NASDAQ:DISCA). These three names all used more than their fair share of red ink.
Here’s the deal.
Discovery Communications Inc. (DISCA)
The good news is, Discovery Communications pumped up its top lines last quarter. The bad news is, the company’s earnings still fell short of expectations, sending DISCA down to the tune of 2.2% on Tuesday, partially recovering from an intraday dip of 5.3%.
For the quarter ending in March, Discovery Communications — the name behind TV channels like The Discovery Channel and Animal Planet — earned an operating profit of 41 cents per share of DISCA on revenue of $1.61 billion. The top line was better than the year-ago tally of $1.56 billion, but just missed analyst estimates. Earnings also missed estimates for a profit of 50 cents per share.
The headwind that put DISCA at the top of Tuesday’s loser list comes as no real surprise … cord-cutting. Discovery has already found itself a victim of the global movement, but conceded the pace of subscriber losses seemed to accelerate last quarter.
Pandora Media Inc (P)
By almost all accounts, shares of online radio company Pandora Media should be rising. Private equity firm KKR invested $150 million in Pandora, and the company all but said it intends to sell itself … soon. An acquisition would likely come at a price much higher than where P shares are trading right now. Pandora even narrowed its loss with its 6.3% improvement in year-over-year revenue.
When push came to shove though, current P shareholders couldn’t look past the fact that the company is still losing money, and revenue fell short of estimates. Sales of $316 million missed projections of $318 million, and though the loss of 37 cents per share was better than the expected loss of 50 cents, traders have understandable doubts that a suitor would want to buy into what will certainly be an expensive repair project.
P ended the day down 4.4%.
Hertz Global Holdings, Inc (HTZ)
Last but not least, car rental icon Hertz Global Holdings saw its stock tumble 14.2% on Tuesday, not because the company missed its first quarter earnings estimates, but because it missed them by a country mile.
Last quarter, turned revenue of $1.92 billion into an operating loss of $1.61 per share. Analysts were expecting sales of $1.94 billion, so the top line was in line. Those same analysts, however, we’re also looking a loss of only 91 cents per share of HTZ.
Lower car rental rates were one of the culprits for a weak fiscal first quarter, but simultaneously, Hertz struggled with falling prices of used car sales. Hertz Global Holdings, like most car rental agencies, buys new cars for its fleet but sells them relatively quickly before high mileage makes them difficult to shed. As we’ve seen for a while now though, a flood of used cars is dragging the used car market into the gutter, crimping a key source of cash flow for Hertz.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
