Why Tesla Motors, Micron Technology, and Intercept Pharmaceuticals Tumbled Today

The stock market closed the week with a substantial decline, as the Nasdaq Composite (NASDAQINDEX: ^IXIC  ) led the broader market down with a drop of more than 2%. High-flying momentum stocks suffered the brunt of the damage in the market Friday, and that, in part, explains why Tesla Motors (NASDAQ: TSLA  ) , Micron Technology (NASDAQ: MU  ) , and Intercept Pharmaceuticals (NASDAQ: ICPT  ) were among the poorer-performing stocks today. Yet, each of those three stocks also had some negative news that shareholders had to overcome, as well.

Source: Tesla Motors.

Tesla fell 6%, as investors worried about several negative reports. The electric car company will no longer benefit from a California rebate to residents who buy its vehicles, and a study from TechnoMetrica found that consumer views of electric cars still suffer from concerns about driving range, recharge time and, most importantly for Tesla, sticker shock. In addition, California changed its rules on zero-emission vehicles, and the result will be to give Tesla fewer ZEV credits for each Model S sale. Given the role that those credits have played in Tesla's profitability, their removal could cause short-term hits to Tesla's financials.

Micron also dropped 6% after initially gaining after its earnings report last night. The memory-chip maker saw solid demand for memory, with Micron benefiting from the struggles of one of its competitors that saw a fire cause damage at one of its DRAM production facilities. Yet, after a run that has seen Micron stock almost double since last July, investors were apparently ready to take some profits on a tough day for the market on the whole. As long as demand for electronic devices remains high, Micron should continue to see good conditions in its memory market.

Intercept Pharmaceuticals declined almost 10% after hedge fund SAC Capital disclosed that it had sold off all but about 6,000 shares in the small biotech after having reported a previous position of almost 1.37 million shares. Given Intercept's soaring share price since December, SAC Capital likely reaped a huge profit on the position, and the hedge fund wasn't the only seller of shares. Also last night, Intercept priced its secondary offering of shares, with the company selling 600,000 shares, and outside institutional shareholders selling another 400,000. With somewhere between $180 million and $190 million in net proceeds from its part of the sale, Intercept should be able to go a long way toward developing its major candidates and getting them through clinical trials and regulatory review.

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  • Report this Comment On April 04, 2014, at 11:05 PM, jodinajoseph wrote:

    Tesla’s growing support from different states and cities is not unwarranted given that the company is still on the lookout for a location for its GigaFactory, a 1000-acre state-of-the-art facility which will add 6,500 jobs in the host city and cost up to $5 billion. The factory will produce battery packs for as many as 500,000 Tesla vehicles by 2020 http://bit.ly/1gSzW3x

  • Report this Comment On April 04, 2014, at 11:18 PM, arkhon wrote:

    "Yet, after a run that has seen Micron stock almost double since last July, investors were apparently ready to take some profits on a tough day for the market on the whole."

    So, no negative news at all on Micron as a company then...that was misleading.

  • Report this Comment On April 05, 2014, at 2:39 AM, DalePlourde wrote:

    Micron just had a strong Q2, the 4th in a row, of strong quarters, with growing EPS and revenue. For me as an investor it builds my confidence, in the company and it's management. As a value investor MU's forward PE of approx. 7 is likely one of the lowest in the S&P 500. Mu as you mentioned, went down largely for profit taking, people rebalancing their portfolios, options plays, it usually goes down after earnings then recovers. I think we may see a dividend in the future as well, I have been writing management suggesting one now that revenues are steadily growing, it is a great turnaround story.

  • Report this Comment On April 05, 2014, at 2:44 AM, DalePlourde wrote:

    Tesla, Facebook, Amazon and other over valued bubble stocks (tesla has in my opinion a worthy product but it is optimism for future success which has pushed it's PE into the stratosphere, I am just waiting until the moderately priced sedan comes out, and if the stock price ever falls to a reasonable valuation like Micron) with high PE's went down, moving closer to a PE which is more representative of their real value. Investors' largely are looking for growing earnings, a dividend, sound fundamentals....

  • Report this Comment On April 06, 2014, at 1:28 AM, BillFromNY wrote:

    I don't consider these companies to be bubble stocks. A bubble stock during the .com era was a company that had a catchy Internet name, an intriguing business plan, and two or three years of losses.

    These companies all have a substantial product, but the market is not yet willing to give Tesla a market cap equal to GM.

    Investors seeing the price of these stocks soar were afraid of being "left behind" and were willing to keep chasing the price upwards. Now they must endure an old-fashioned correction. If they don't panic, in a year more or less their paper losses will disappear and their investments will move to the plus side.

  • Report this Comment On April 07, 2014, at 6:47 PM, danialwilson wrote:

    Micron Technology revenues equaled $4.11 billion and adjusted earnings per share was $0.85, whereas analysts had estimated $3.98 billion in revenues and earnings per share of $0.76 http://goo.gl/osUDev

  • Report this Comment On April 07, 2014, at 8:58 PM, annaarron wrote:

    The stock price of Micron Technology, Inc. is currently up almost by 4%, after the company announced its financial performance for the second quarter of its fiscal 2014.

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