Why Plug Power, BroadSoft, and Universal Display Tumbled Today

On Monday, the broader market recovered from early losses. But these stocks weren't able to make up lost ground. Find out why.

May 5, 2014 at 8:30PM
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Out of the gate, Monday was an ugly day for the stock market, which suffered big losses early in the session. But even though violence in Ukraine showed few signs of letting up and even though investors worried about new data pointing to potential weakness in the Chinese economy, favorable news on the domestic economic front helped pull stocks back from the brink to post modest gains on the day. Still, shareholders in Plug Power (NASDAQ:PLUG), BroadSoft (NASDAQ:BSFT), and Universal Display (NASDAQ:OLED) couldn't escape losses Monday.

Plug

Source: Plug Power.

Plug Power dropped almost 10%, adding to its losses over the past couple of weeks. After a secondary offering of 22.6 million shares two weeks ago, Plug Power stock has lost more than a quarter of its value, as investors not only question the fuel-cell company's future prospects but also actively sell the stock short. Short-sellers can note that Plug Power has gone through similar patterns in the past, with bouts of optimism causing temporary surges in share price that have eventually given way to disappointment. However, with roughly 30% of the company's outstanding shares sold short, Plug Power could make bullish investors happy if future positive news from the company creates a short squeeze, as the high short interest could send share prices much higher.

BroadSoft sank 19% after the company's latest quarterly report included both disappointing results for the first quarter and troubling guidance for the current quarter. BroadSoft makes software and provides ancillary services that help enable communications across its customers' platforms, and with the rise in enterprise demand for data analytics and cloud-related applications, BroadSoft's industry has plenty of potential. Yet adjusted earnings and revenue fell short of what investors were looking for, despite an 11% gain in revenue compared to the year-ago quarter. Moreover, although revenue guidance for the second quarter looked solid, BroadSoft sees earnings per share coming in well short of what investors wanted to see. Without working harder to take advantage of opportunities in the space, BroadSoft won't be able to convince investors of its long-term promise.

Oled Lg

LG Display curved OLED television. Source: LG Display.

Universal Display's losses amounted to nearly 10%, with the maker of organic light-emitting diodes seeing its share drop in response to reports that television manufacturer Samsung might not go forward with initial plans to expand its production of televisions making wider use of OLED technology. Universal Display has looked forward to greater demand for OLED products from television manufacturers like Samsung and LG Display for a long time, so if the reports on Samsung are true, then it could mark a big step backward for Universal Display. Already, investors had shown signs of impatience with the company's progress, and without a high-profile success story when Universal Display reports its first-quarter earnings later this week, the stock could see even further declines.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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