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Why voxeljet, Gigamon, and Nordic American Tankers Tumbled Today

After two days of declines that scared many investors about the future of the five-year-old bull-market rally, stock markets posted a modest rebound on Tuesday. Even in the face of rising tensions in Ukraine, strong performance in emerging markets helped give investors some confidence about the prospects for the U.S. economy. But some stocks still dropped, and voxeljet (NYSE: VJET  ) , Gigamon (NYSE: GIMO  ) , and Nordic American Tankers (NYSE: NAT  ) were among the worst performers in the market today.

Source: voxeljet.

3-D printing company voxeljet dropped 14% after announcing that it would attempt to raise about $70 million in new capital through a secondary offering of shares. Given the highly competitive situation in 3-D printing right now, voxeljet's wishes to raise money for further expansion of global service centers and to do research and development on new printing techniques seems perfectly reasonable. The problem, though, is that by issuing so much new equity, existing shareholders will have any profits from voxeljet's eventual success diluted. Moreover, voxeljet's success is far from assured, as rival companies are looking to take voxeljet's industrial focus and seek to capture their own share of that highly lucrative market. Moreover, given the hit that speculative stocks have taken lately, voxeljet's timing seems almost like panic-selling for both the company and selling shareholders. As recently as a month ago, voxeljet could have reaped half again as much money from an offering this size.

Gigamon plunged 34% after announcing preliminary first-quarter results that shocked investors. The maker of technology to manage network data traffic cut its revenue outlook by about 10%, citing the failure of an existing customer from the Europe/Middle East/Africa region to execute an expected large transaction. Gigamon might recapture some of its lost business in the current quarter, but shareholders nevertheless panicked at the prospect that strong competition could lead to slower growth rates in the future. The drop sent Gigamon shares below their IPO price almost a year ago, showing just how vulnerable some companies are to major customers that fail to deliver on the expectations investors have of them.

Nordic American Tankers fell 10% after boosting the size of its own secondary share offering by 2 million shares, raising more than $100 million by pricing its 12-million-share sale at $8.62 per share. That price was 9% below where the stock closed Monday, and today's losses sent Nordic American Tankers stock even below the secondary-offering level. Investors have been increasingly optimistic that the state of the shipping industry is improving, and Nordic American Tankers said it intends to use the money it raises to finance between two and four vessel acquisitions. That would expand Nordic American's fleet by 10% to 20%, but if the company is wrong about the health of tanker demand, it could prove to be a costly mistake.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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8/31/2015 4:04 PM
GIMO $22.78 Down -0.25 -1.09%
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