Why Gogo, Coach, and Ballard Power Systems Tumbled Today

Tuesday continued the stock market's impressive run, with a number of companies reporting solid earnings and improving overall investor sentiment. Yet even though major market indexes rose about half a percent on the day, Gogo (NASDAQ: GOGO  ) , Coach (NYSE: COH  ) , and Ballard Power Systems (NASDAQ: BLDP  ) weren't nearly as fortune, suffering substantial declines as a result of negative news affecting the companies.

Source: Gogo.

Gogo plunged 29% after news that the in-flight Internet provider will have to deal with a new major competitor. Last night, AT&T said it would offer a rival Internet service to airline passengers, with plans to give 4G service with the assistance of partner Honeywell. Gogo will have about a year and a half to secure its first-mover advantage, as AT&T hopes to start making its service available in late 2015. Gogo investors fear that at best, the company won't be able to charge as much as it currently does in fees, and at worst, customers might choose the better-known AT&T service over its less powerful brand name.

Source: Coach.

Coach fell 9% after the handbag and accessories retailer posted a big drop in its North American sales in its quarterly results. Although international sales rose 14%, same-store sales in North America plunged 21%, with Coach having thus far proven unable to deal with strength from its main competitors in the accessories space. Without any confidence that Coach will be able to stand up to its rivals in the long run, Coach shareholders weren't willing to reward the retailer even for beating earnings estimates by more than 10%. Unless Coach can dramatically ramp up its international presence to an even greater extent, it'll be problematic for the retailer to recover its past glory as a luxury retailer.

Ballard Power Systems dropped almost 10% after the fuel-cell company reported quarterly results and future guidance that disappointed shareholders. Revenue climbed 13%, but that was far slower than the 20% to 25% growth rate investors were hoping to see, especially given the success Ballard and its partners have had in selling systems lately. Ballard's net loss did narrow by more than half, and recent transactions have made the company optimistic about its future. But as with many high-growth stocks, Ballard Power Systems needs to do an even better job of taking full advantage of the opportunity in fuel-cell systems right now if it wants to avoid a repeat of some of the company's past disappointments.

Three stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You to Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2935935, ~/Articles/ArticleHandler.aspx, 8/2/2014 12:51:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement