Why Leidos Holdings, SFX Entertainment, and QIWI Tumbled Today

Investors were content to let the stock market drift Thursday, with only small declines for the broader market. But these three stocks saw bad news push their shares sharply lower. Find out why.

Mar 27, 2014 at 8:30PM

Looking at the broad stock market benchmarks, Thursday appeared to be a largely meaningless day for the market, as investors saw only small declines pegged largely to ongoing uncertainties about international economic and political issues. Yet, even as signs of U.S. economic growth continued to show up in data releases, several stocks posted substantial losses, including Leidos Holdings (NYSE:LDOS), SFX Entertainment (NASDAQ:SFXE), and QIWI (NASDAQ:QIWI).

Leidos plunged 18% as the company's earnings release this morning included troubling guidance for the coming fiscal year. Although Leidos' fiscal fourth-quarter results came in ahead of what investors had expected to see from the national-security services company, its projections for fiscal 2015 earnings and revenue fell well short of what shareholders had wanted to see, with earnings 10% to 18% below consensus estimates, and revenue falling short by 7% to 10%. The departure of Chief Operating Officer Stu Shea also hinted at leadership issues among Leidos' top corporate ranks, and with the company just recently having split up from SAIC, solid strategic direction is more important than ever for Leidos to establish itself as a strong independent entity.

Bear Market Jean Pierre Lavoie

Source: Wikimedia Commons, Jean-Pierre Lavoie.

SFX Entertainment dropped 12% after announcing its results this morning. The live-events coordinator reported a much-larger loss than shareholders had expected, with revenue coming in about 25% below investors' projections. The stock has performed terribly since coming public less than six months ago, with today's loss taking its drop from its first-day closing price to more than 40%. The question for SFX is whether its recent string of acquisitions after its IPO will end up producing profits in the long run; but for now, investors are unimpressed with SFX's efforts to find sufficient marketing and sponsorship initiatives to reap the partnership-related revenue that will drive its future results.

QIWI fell 11% as the continuing fallout from economic sanctions against Russia hits the company's money-transfer business. Some foreign central banks have refused to accept wire transfers from various Russian financial entities in order to support the sanctions, and that spells trouble for QIWI given its reliance on foreign remittances to drive its business. As sanctions expose risk among certain Western financial institutions that have done substantial amounts of business with Russia, the question will be whether Western governments blink first and free up QIWI to resume its normal operations. If sanctions last for a long time, they'll eventually eat into QIWI's growth.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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