Why Organovo Holdings, lululemon athletica, and Ariad Pharmaceuticals Tumbled Today

Fighting in Iraq caused the stock market to tumble Thursday, but these stocks had even bigger problems pulling them down.

Jun 12, 2014 at 8:34PM

Bad news in the Middle East is rarely good news for the stock market, and the rising tensions in Iraq were one of the primary factors pulling down stocks on Thursday. While it's too early to tell whether the long-term impact of the Iraqi situation will have global economic impacts, the kneejerk reactions in the energy market raised near-term concerns about whether a market that many see as already overvalued can continue to climb. Helping to sour the mood of investors today were Organovo Holdings (NYSEMKT:ONVO), lululemon athletica (NASDAQ:LULU), and Ariad Pharmaceuticals (NASDAQ:ARIA), each of which fell sharply today.

Source: Organovo Holdings.

Organovo Holdings dropped 7% after the 3-D bio-printing specialist issued its full-year financial report for fiscal 2014. The numbers showed a big jump in expenses, ranging from research and development to general overhead costs. Those figures made investors nervous that a further round of potentially dilutive secondary stock offerings might be necessary at some point in the not-so-distant future. Few investors dispute the potential that Organovo has to revolutionize the way that transplants and implants are done, but it's unclear whether Organovo's success will come soon enough to reward early investors sufficiently for their loyalty.

Lulu Woman

Source: Lululemon Athletica.

lululemon athletica plunged 16% as the yoga-apparel retailer once again disappointed investors with its quarterly results. Even though Lululemon said it would buy back $450 million of its shares, the company's fiscal first-quarter profit dropped 60%. Same-store sales rose 1% for the quarter, but Lululemon said that it expects a reversal in comps in the current quarter, with percentage declines in the low- to mid-single digits. In addition, reduction in Lululemon's full-year guidance by 5% to 7% didn't do anything to dispel fears that the worst could still be yet to come for the yoga retailer. With customers not having reestablished their loyalty to Lululemon after the now-infamous yoga-pant fiasco, competitors have taken full advantage, and Lululemon might not be able to win those defectors back to its cause.

Ariad Pharmaceuticals fell 9% after the company priced an offering of convertible senior notes. To raise capital, Ariad offered $200 million in notes paying 3.625% and allowing bondholders to convert their notes into shares at a price of $12 per share. That's well above the current share price, limiting the potential dilution to existing shareholders. Nevertheless, for those investors who believe that Ariad has huge upside potential, having convertible noteholders share in their long-term profits isn't the ideal result.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier, and more accurately, than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not only how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns, you will need to Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica. 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.

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