Why Groupon, Zulily, and Whole Foods Market Tumbled Today

The broader market posted reasonable gains Wednesday, but there was plenty of blood on Wall Street as well. Find out why these stocks plunged.

May 7, 2014 at 8:35PM

The stock market went through a topsy-turvy day Wednesday, as optimism about a potential resolution to the Ukrainian situation trumped nervousness over how the Federal Reserve might address certain risks that Chairwoman Janet Yellen brought up in Congressional testimony today. Even though the broader major-market indexes closed higher, Groupon (NASDAQ:GRPN), Zulily (NASDAQ:ZU), and Whole Foods Market (NASDAQ:WFM) plunged today.


Source: Groupon.

Groupon plummeted almost 21% even after the daily deals-turned-online retail company issued reasonably strong quarterly results. Groupon posted a narrower adjusted loss than investors had expected, and revenue climbed 26%. But investors still seem unconvinced that the company's long-term online retail strategy will prove successful, especially as it ventures into territory in which far larger players already hold dominant positions. Until Groupon shows much better results than it gave investors today, it'll be hard for the company to convince shareholders that its turnaround is for real.

The nearly 30% collapse in Zulily shares came amid rising losses and operational concerns about the online retailer's just-in-time approach to fulfilling orders. Sales at Zulily soared by 87%, which was better even than the ambitious growth expectations that investors already had for the stock. Even though Zulily raised its full-year sales guidance, earnings didn't make the grade, as a rush of orders as Easter approached forced the company to incur additional costs and suffer longer shipping times. The challenge that Zulily will face is reassuring customers that any negative experiences they might have had won't be repeated, as online retail is so fickle that Zulily can't count on getting many second chances.


Whole Foods Market suffered a 19% loss as the premium grocer's quarterly results fell short of expectations. Same-store sales growth of 4.5%, overall revenue gains of nearly 10%, and roughly flat net income year-over-year weren't up to par, and Whole Foods also cut its guidance for revenue growth by one-half to one percentage point and for earnings per share by $0.06 to $0.09 per share. Many investors are nervous that Whole Foods will dilute its margins by offering its high-quality food at lower prices in order to compete with other grocers, which increasingly are jumping onto the organic and natural-foods bandwagon. Yet in the long run, Whole Foods still expects to expand its network of stores and find new ways to use the loyalty of its customer base to bring sustainable growth.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour. (That's almost as much as the average American makes in a year!) And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click here to uncover the name of this industry-leading stock, and join Buffett in his quest for a veritable landslide of profits!

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Whole Foods Market. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

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.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

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. The show is also heard weekly on dozens of 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. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers