Why BlackBerry, World Acceptance, and Bridgepoint Education Plunged Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Investors remain nervous about the prospects for the broader economy and the Federal Reserve's possible response to employment data this week, but that didn't hold the stock market back from modest gains today. Nevertheless, several stocks dropped dramatically, with BlackBerry (NASDAQ: BBRY  ) , World Acceptance (NASDAQ: WRLD  ) , and Bridgepoint Education (NYSE: BPI  ) all posting significant losses. Let's look more closely at these stocks to find out why they dropped so much today.

BlackBerry fell 16% as an investor group led by Fairfax Financial (TSX: FFH  ) (NASDAQOTH: FRFHF  ) proved unable to gain enough support to follow through on a proposed takeover of the ailing mobile-device maker. Instead, Fairfax and several other institutional investors will buy $1 billion in convertible debt, with a conversion price of $10 reducing any upside potential in the stock even if the company recovers and putting BlackBerry's viability further into question. With CEO Thorsten Heins giving up his leadership post in favor of John Chen, the company won't have much time to convince investors that there's a way out for BlackBerry going forward.

World Acceptance dropped 12% as the company's president and chief operating officer, Mark Roland, announced his resignation. Roland's move follows a poor fiscal second-quarter earnings report from World Acceptance two weeks ago, in which the provider of payday loans and other short- and medium-term consumer credit only posted earnings growth of 5% on an 8% increase in sales. Rising loan delinquency rates point to possible deterioration in the subprime-lending sector, and Roland's departure only makes it more difficult for the company's remaining leadership to adjust to changing conditions in the industry.

Bridgepoint Education declined 9% after analysts at Deutsche Bank downgraded the for-profit educator's shares. Despite a substantial rebound in recent months, the analysts believe that increasing competition could lead to a tuition price-war among the industry's top players. Still, Bridgepoint has done a good job of boosting revenue even in a tough environment in for-profit education, and recent renewals of its accreditation could help it gain more market share even if its rival struggle.

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  • Report this Comment On November 05, 2013, at 10:02 AM, notapaydaylender wrote:

    I hope you guys do better research on other stocks than you did on WRLD. No, I don't work for them, but know enough to tell you that World is NOT a payday lender. They make installment loans and don't hold post-dated checks. Research Advance America and compare.

    Pretty big goof guys.

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