Monday was a positive day on Wall Street, and the stock market bounced back from losses to close last week. The Dow picked up a triple-digit daily gain, and most broad-based market benchmarks rose between 0.75% and 1% on the day. Somewhat surprisingly, the gains came despite a sizable drop in crude oil, which fell back below the $45 per barrel level. Yet weakness in the U.S. dollar seemed to support views that earnings growth could be in the cards for later in the year, and investors celebrated what could become a long-awaited tailwind for market fundamentals. Even so, though, some individual companies missed the boat, and Baidu (BIDU -0.56%), Pandora Media (P), and Haemonetics (HAE -2.66%) were among the worst-performing stocks in the market Monday.
Baidu dropped 8% after news came out that regulatory authorities in China are looking at the way the online search giant vets its paid-search customers. The death of a 21-year-old student suffering from a form of cancer reportedly involved alternative treatments that the student found through a Baidu search, and critics now argue that Baidu should have done more to look into the alternative medical providers from which it accepted advertising money. Some analysts are concerned not only about the incident itself, but by the potential that this could be just the first in what might become a string of regulatory investigations. Baidu shares have done a good job of recovering from extremely weak levels last year, but the company and its shareholders still have to deal with the uncertainties of China's regulatory framework and the attendant threats to value they represent.
Pandora Media finished down 9% Monday, giving up all of its gains from Friday following its first-quarter earnings report. The streaming-music company had said on Thursday night that it posted a nearly 30% rise in quarterly revenue, and that its adjusted EBITDA loss was less severe than most had originally expected. CEO Tim Westergren had argued that the company's key competitive advantage is "the precision of our personalization" -- a quality that it sees as impossible for competitors to replicate. Yet Monday's drop suggests that at least some investors had a change of heart over the weekend, and it is certainly true that other rival music services have the potential to catch up with and surpass Pandora's first-mover advantages in key areas.
Finally, Haemonetics plunged 15%. The blood and plasma specialist reported sales growth of 7%, but it lost money on a GAAP basis for the quarter because of certain restructuring and other extraordinary costs. Even on an adjusted basis, net income fell by more than a fifth, closing its fiscal year with flat revenue and adjusted net income that fell 13% from fiscal 2015 levels. Interim CEO Ronald Gelbman admitted that the top-line figure was "within our expected range, albeit at the low end." Moreover, Haemonetics chose to withhold guidance until its annual investor day on May 10. The move pushed Haemonetics stock to a new low for the year, and shareholders are becoming increasingly cautious about the company's growth prospects moving forward.
