Tuesday was a poor day for the stock market, which lost ground as investors waited for the outcome of the ongoing two-day meeting of the Federal Reserve's monetary policy-making body. Interest rates are likely to get their first boost of the year from the Federal Open Market Committee, but investors will also be looking for signs of whether an anticipated three rate hikes during 2017 will actually come to pass.
Some nervousness about the ability of the federal government to follow through on promised reforms and legislative changes also weighed on sentiment to some extent, and a few individual stocks suffered bad news that produced outsized losses on the day. Valeant Pharmaceutical (NYSE:BHC), Tilly's (NYSE:TLYS), and Pandora Media (NYSE:P) were among the worst performers. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Valeant gets a vote of no confidence from Pershing Square
Valeant Pharmaceuticals stock closed down 11% in the wake of news that longtime shareholder Bill Ackman of Pershing Square Capital Management had sold off his stake in the beleaguered drug company. Ackman was one of the last major holdouts to hang onto his position in Valeant, even as other well-known institutional investors bailed out of the stock on the way down. At this point, Valeant has been working to restructure its balance sheet in order to extend the maturity dates of outstanding debt. With the stock having plunged from triple-digit levels to today's closing price of about $11 per share, Valeant will have to work hard to recover even a portion of its losses over the long run.
Tilly's falls despite solid earnings
Shares of Tilly's dropped 11% after the company reported its fourth-quarter financial results on Monday evening. The California-based retailer said that revenue rose less than 1% on just a 0.1% rise in comparable-store sales. Net income more than doubled from year-ago levels, and CEO Ed Thomas trumpeted the bottom-line gains and the company's payment of a special dividend last month. Yet Tilly's warned that its fiscal first-quarter results would likely see a high-single-digit percentage drop in comparable-store sales due to the timing of the Easter holiday and tough weather conditions on the West Coast in February. The retailer expects losses of $0.07 to $0.15 per share for the quarter, and that disappointed investors who had hoped that Tilly's would be able to generate more positive momentum coming out of the holiday shopping season.
Pandora moves forward
Finally, Pandora Media stock fell 6%. The streaming radio specialist said that it would launch an on-demand music streaming service beginning on Wednesday, and investors weren't impressed with the company's strategic decision. By entering the space, Pandora will have to go up against industry giants, and the big question that the company will face is whether the Pandora Premium subscription tier will generate the numbers that the company hopes to achieve. At $9.99 per month, Pandora hopes that users will trust in the Music Genome Project's ability to select songs more effectively and easily than its competitors. Nevertheless, it will be tough to surpass the popularity of the companies that Pandora is going up against, giving the new player an uphill battle in the months to come.