Why InterOil, Ulta Salon, and Barnes & Noble 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.

Stocks broke their long losing streak, with the Dow and S&P 500 climbing more than 1% after five straight losing sessions going back to late November. But even positive news on the employment front wasn't enough to rescue every stock from company-specific challenges. Among those posting major losses were InterOil (NYSE: IOC  ) , Ulta Salon (NASDAQ: ULTA  ) , and Barnes & Noble (NYSE: BKS  ) . Let's find out why these stocks didn't join in the broader market's celebration today.

InterOil plunged 37% after the oil and gas exploration and production company finally ended years of struggle by accepting a deal with France's Total (NYSE: TOT  ) to help it develop its Papua New Guinea properties. The deal involves Total buying a majority stake in the oil and gas fields for $613 million up front, and Total will proceed with helping to build and operate a liquefied natural gas project in order to export natural gas from the island nation to energy-hungry countries across the Asia-Pacific region. InterOil could earn $212 million in milestone payments and also variable amounts if natural gas production exceeds certain thresholds, but investors clearly wanted more despite the lack of leverage InterOil has after failing to close a deal with ExxonMobil despite extended negotiation.

Ulta Salon dropped 21% as investors fled the beauty salon and cosmetics retailer after its earnings report. Ulta posted solid revenue growth of 22%, with same-store sales growth of 6.8% and solid overall rises in adjusted earnings. But the premium-priced stock indicated higher expectations among investors, and poor guidance based on weak early holiday-retail trends spooked shareholders into selling.

Barnes & Noble fell 12% after learning that the Securities and Exchange Commission is investigating the bookseller's accounting practices. The investigation centers on two things: a restatement of income from earlier this year and allegations from an employee about the allocation of various IT costs between two of the company's divisions. Given the challenges that Barnes & Noble already faces in holding off massive competition in selling both physical books and its Nook e-reader, an SEC investigation is the last thing investors needed added to their plates.

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  • Report this Comment On December 08, 2013, at 11:30 PM, Joenobody09 wrote:

    You do your readers a great disservice with your description of why IOC went down 37% after a deal was struck.

    But of course, readers who are too lazy to read up on IOC deserves to miss out on a potential 10-20 bagger. Fool on indeed.

  • Report this Comment On December 09, 2013, at 6:24 AM, jmu1986 wrote:

    Hey Joe, you buy more shares then! This stock is now worth a whopping $12, in value. That is ALL! Every company in USA has future value, it is TODAY we need that value! TOTAL got more total gas at about 50 cents on the dollar. TOTAL has the best of this deal, since they have now tied up IOC and their only thing they supposedly had, GAS! FOOL to buy this POS here!

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