Why Herbalife, voxeljet, and J.C. Penney Tumbled Today

Stocks dropped again, leaving relatively few winners. But these three stocks managed to make the most of a bad Friday. Find out more here.

Apr 11, 2014 at 8:35PM

The stock market continued its slump Friday, as investors appeared to lose confidence in formerly high-flying stocks that combine high-growth potential with high risk. With many pointing to valuations as having climbed too far, momentum stocks were among the most-punished investments on the market today. Leading the way down were Herbalife (NYSE:HLF), voxeljet (NYSE:VJET), and J.C. Penney (NYSE:JCP), each of which fell substantially more than the 1% to 1.5% losses for the broader market.


Source: Herbalife.

Herbalife dropped 14%, with the decline coming late in the day after reports that the seller of nutritional and personal-care products was the subject of a probe from the FBI and the Department of Justice. Herbalife said, after the market closed, that it had no knowledge of such an investigation and that it has not yet received formal notification from either of the federal agencies. But with two separate news sources reporting at least the FBI investigation, investors sold first and asked questions later. The real question that long-term investors should ask, though, is whether they think a probe will actually result in any substantial punishment for Herbalife, which has become the battleground for fights among prominent hedge-fund managers on opposite sides of trading positions in Herbalife stock. The rub here, though, is that a potential criminal investigation ups the ante from an earlier-announced probe from the Federal Trade Commission.

The 19% plunge in voxeljet shares today came after the pricing of its 3 million share secondary offering came in far lower than existing shareholders wanted to see. After having traded as high as $70 per share last November, voxeljet was willing to accept just $15 per share in its offering, signaling the level of desperation that the 3-D printer has to get working capital. The capital-raising fire sale certainly can't give investors much confidence in voxeljet's own assessment of its future prospects, as otherwise, voxeljet would have postponed the offering and protected investors from the huge dilution that will now result from the stock sale.

J.C. Penney fell almost 10% as one of the real estate investment trusts that owns malls where the ailing retailer is an anchor tenant said that it expects to see J.C. Penney close more of its stores in the future. J.C. Penney has a strong opportunity during 2014 to rebuild on what should be remarkably easy comparisons to a horrible 2013, which could help restore confidence, at least among those investors who focus solely on year-over-year comps. In the longer run, though, J.C. Penney needs to address the difficult issues that initially led it to try its failed experiment to shift from its traditional discounting business model. Unless it can both recapture its lost customer base and woo new shoppers into its stores, J.C. Penney's future doesn't look bright.

The next tech craze will be about what you wear
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold during the next decade. But you can invest in it right now... for just a fraction of the price of a share of the iPhone maker's stock. Click here to get the full story in this eye-opening new report.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has the following options: long January 2016 $57 calls on Herbalife. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers