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Why Are Investors Fleeing From These 5 Stocks Today?

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The trading week is on the verge of ending on a very sour note for five companies, all of which are getting clobbered in early afternoon trading today. Let’s take a look at the catalysts which are driving these stocks into the ground and whether the declines appear justified or not.



Let’s start with Pandora Media Inc (NYSE:P), down by 32.93% today after the music streaming service released its third quarter results after the markets closed yesterday. Despite revenue only marginally missing estimates and earnings being in-line with expectations, shares plunged by over 20% after-hours and only worsened from there. While Pandora Media Inc (NYSE:P) CEO Brian McAndrews sounded positive about the company’s results for the quarter, expressing that it weathered the entrance of major new competitor Apple Inc. (NASDAQ:AAPL) into the industry very well, investors don’t appear to agree. It doesn’t help that Pandora Media Inc (NYSE:P) lowered its full year guidance and that its fourth quarter guidance came in below analysts’ projections. Pandora also reported that it reached a $90 million settlement with labels represented by the Recording Industry Association of America over its past use of pre-1972 music, royalties for the use of which Pandora stopped paying years ago. The news is not good for Richard Gerson and Navroz D. Udwadia‘s Falcon Edge Capital, which bumped its position in Pandora up to 11.62 million shares in September.

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At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

Stericycle Inc (NASDAQ:SRCL)’s third quarter results didn’t impress the market either, as evidenced by its 21.84% loss today. The waste management company’s earnings took a big hit, plunging by just over 50% year-over-year to $0.47, and though its revenue was up by 7.6% to $718.6 million, that figure also came short of estimates. The earnings led to two analysts slashing their price targets on the stock, with Robert Baird downgrading the stock to ‘Neutral’ from ‘Buy’ and cutting its price target on it to $130 from $145, while RBC Capital Market slashed their price target on shares of Stericycle Inc (NASDAQ:SRCL) by $25 to $122. Elite investors in our database were not keen on Stericycle Inc (NASDAQ:SRCL) as of June 30, owning just 1.10% of its common shares.

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Shares of Stratasys, Ltd. (NASDAQ:SSYS) have declined by 12.96% today after the maker of 3D printers warned that its third quarter results would miss the mark and that it would take a goodwill impairment charge to write down the value of its MakerBot unit. Stratasys, Ltd. (NASDAQ:SSYS) is now projecting third quarter revenue of $166 million-to-$168 million and non-GAAP earnings between a loss of $0.03 per share and a profit of $0.02 per share. Both projections are well off Wall Street’s predictions of $0.08 profit per share on $184.6 million in revenue. Stratasys, Ltd. (NASDAQ:SSYS) is now down by over 67% year-to-date, and becoming more attractive to a potential acquirer like Hewlett-Packard Company (NYSE:HPQ), which is poised to make a big entry into the 3D printing market next year. Several investors that we track were quite bullish on Stratasys in the second quarter as its valuation began to slide. Philippe Laffont’s Coatue Management opened a position of just under 2.40 million shares during the period, while Chilton Investment Company hiked its stake by 3,483% to 1.28 million shares.

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A discussion of two more of the day’s worst performing stocks can be found on the following page.

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