Why Pharmacyclics, Inc., Matador Resources Co, and Twitter Inc Are Today's 3 Worst Stocks

Despite a good day from the market that saw the S&P 500 close higher than 1,900, these three stocks took a tumble and disappointed investors

May 23, 2014 at 7:00PM
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The market struck quickly out of the gate today and never looked back, as stocks surged higher across most sectors today. The S&P 500 (SNPINDEX:^GSPC) hit a major milestone, closing out the day just over the 1,900-point mark after gaining 0.4%. There's plenty of optimism around the market even as many top indices trail last year's astronomical gains, and with stocks beating down the path to record highs, investors are looking forward to what the rest of 2014 could bring.

The economy is showing signs of picking up again after the first quarter's slow GDP growth, as well. New single-family home sales jumped in April, according to data today from the Commerce Department. They jumped 6.4%, to 433,000 sales for the month, exceeding economist projections and topping March's gains. However, homebuilders haven't been so optimistic about this trend. Home sales have slackened since early last year. Housing supply has grown, while median home prices have fallen off, a trend that should help the market bring back skittish buyers, but it will take a surge of demand and greater consumer confidence in the economy's direction before home sales will pick up consistently for the long term.

Despite the upbeat data and the S&P's gains, however, three notable stocks couldn't make up any ground today, and slipped into the red. Here's why Pharmacyclics (NASDAQ:PCYC), Matador Resources (NYSE:MTDR), and Twitter (NYSE:TWTR) left investors disappointed to close out the week.

Pharmacyclics's 2014 blows keep on coming
Pharmacyclics took a huge blow today, shedding 7.3% in continuing what's been a headache-inducing year so far for shareholders of this once-soaring biotech stock. Shares of the company have plunged 37% during the past three months and are down 24% during the last six months. Despite that pessimism, however, this biotech has made the most of its lone approved drug Imbruvica so far. Regulators approved Imbruvica last year for mantle cell lymphoma, and Pharmacyclics is angling to add an approval for chronic lymphocytic leukemia, as well. The drug already managed more than $56 million in sales in its first-full quarter on the market this year.

So, why the negativity around this stock? Pharmacyclics projects total product sales of only around $295 million through 2014, below what investors and analysts have hoped for from this budding biotech company. As today's drop shows, this stock has been volatile for investors even on days with no news. It doesn't help recent shareholders that, before 2014's downturn, Pharmacyclics had been one of the market's darlings, as the stock jumped by more than 6,700% during the past five years. Investors who got in early on this stock have made a killing; but if this biotech can capitalize on Imbruvica, score FDA approval for CLL, and ride this drug to blockbuster status, there's still upside here for investors to catch. There's always the potential that a pipeline-starved big pharma or big biotech firm will sniff around Pharmacyclics in the interest of an acquisition, as well, so don't lose hope for this stock going forward, even with this year's struggles.

Matador Resources didn't end up much better today, with shares of the independent oil and gas company plunging 5.8%. The stock had surged by more than 170% during the past year, emerging as a steal for investors as the company pushed revenue and production higher by double-digit percentages. That came crashing down today as Matador announced a secondary stock offering of 7.5 million shares, a move that it expects to generate $182 million or so before expenses in order to fund new capital expenditures. While the move likely will help Matador out in the long run -- analysts from Wunderlich Securities have cited the move as allowing the firm to operate second rigs in the Permian Basin and Eagle Ford -- it's still a tough blow for investors today. Keep an eye on the long run: If the move keeps production and revenue jumping at Matador, this stock won't be down for long.

Twitter Logo

Source: Wikimedia Commons

That's a much better feeling than what's going through the mind of Twitter investors right now. The social media stock continued its nightmarish year today, dropping 3.2% despite a lack of news in what's been a 31% nosedive during the past month. Investors have dealt with towering expectations for this company that have plagued the stock. That was never more evident than last month after the company announced a gain of 14 million new active users in the first quarter, and more than doubled revenue year over year, two optimistic points that nonetheless hammered the stock. While some insiders have held onto shares following the stock's expiration of its lockup period since its IPO, Twitter's stock has hardly seen the green recently. Until the company gets its advertising and monetization plans on a consistent track, it looks it's best to let the market work out its hype over Twitter.

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Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Twitter. 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.

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