Why United Continental Holdings, Fusion-io, and Eagle Rock Energy Partners Tumbled Today

The broader stock market was mixed, with rising geopolitical tension and mixed earnings reports keeping a lid on further gains. But these three stocks suffered much larger losses. Find out why here.

Apr 24, 2014 at 8:05PM

On Thursday, stocks fought a tug of war with each other, as a flood of earnings results left some stocks much higher and others much lower. Overall, good news from the tech sector's biggest player helped lift the tech-heavy Nasdaq, but the Dow finished unchanged on the day. Still, many stocks fell sharply, and United Continental Holdings (NYSE:UAL), Fusion-io (NYSE:FIO), and Eagle Rock Energy Partners (NASDAQ:EROC) were among those stocks that fell the most today.


Source: United Continental.

United Continental dropped 10% after the airline reported a wider loss than investors had already expected. Passenger revenue per available seat mile dropped 2%, and the majority of that decline came from cancellations that poor winter-weather conditions forced United Continental to make. For the quarter, United Continental's loss grew by 46%, with revenue inching down by a fraction of a percent to $8.7 billion. Capacity factors and passenger traffic levels both dropped, keeping the airline's load factor unchanged. A rise in operating expenses also called into question United Continental's efforts to cut costs, and with several other airlines reporting reasonably good results, it's clear that United Continental still faces an uphill battle to become as efficient as its peers.

Fusion-io declined 11%. The maker of flash memory and flash-storage technology reported a nearly 15% rise in revenue from its year-ago quarter, which was actually slightly better than most investors had expected to see. Yet, with the company issuing somewhat vague guidance that current-quarter revenue will be "in-line to slightly up sequentially," investors who were expecting more dramatic sales gains in the mid-single digits were concerned about whether Fusion-io's growth would measure up this quarter. With net losses widening from year-ago levels, both using GAAP and on an adjusted basis, investors aren't certain about Fusion-io's ability to become profitable in the near future.

Image credit Flickr/Lindsey G.

Eagle Rock Energy Partners plunged 17% after the master limited partnership said it would suspend its distributions to unitholders. With the MLP slated to sell off its midstream business, Eagle Rock Energy Partners is positioning itself to become a pure-play in oil and gas exploration and production. Yet, with the sale having hit an FTC regulatory roadblock at least temporarily, Eagle Rock has had to wait before closing the sale. While Eagle Rock investors are panicking at the loss of income, they might not have given enough weight to the MLP's assurances that, as soon as the transaction gets approval from regulators, it should be able to resume its distributions. With so much promise, Eagle Rock might be a smart bargain buy after today's income-investor-driven plunge.

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