The expected passage of the tax bill wasn't enough to move stocks Wednesday, as the Dow Jones Industrial Average (^DJI 0.67%) and the S&P 500 (^GSPC 0.87%) closed with small losses.
Today's stock market
| Index | Percentage Change | Point Change |
|---|---|---|
| Dow | (0.11%) | (28.10) |
| S&P 500 | (0.08%) | (2.22) |
Data source: Yahoo! Finance.
Energy stocks rose on higher crude prices, with the SPDR S&P Oil & Gas Exploration & Production ETF (XOP 0.76%) adding 2.5%. Gold stocks also advanced; the VanEck Vectors Gold Miners ETF (GDX -4.52%) closed up 1.7%.
As for individual stocks, BlackBerry (BB 1.82%) shares rose as the company's turnaround began to take hold, and Stitch Fit (SFIX -0.94%) fell after its first earnings report as a public company.
Image source: Getty Images.
BlackBerry gains some momentum
Remember BlackBerry? Well, if you haven't been paying attention to the Canadian company formerly known as Research In Motion in the last year or so, you may be surprised to know BlackBerry is a software company focused on cybersecurity for enterprise devices, connected cars, and the Internet of Things. Today, the company's Q3 revenue and profit took Wall Street by surprise, sending the stock soaring 12% to a 52-week high.
GAAP revenue fell 22% to $226 million, and non-GAAP earnings per share were $0.03, compared with $0.02 the year before. Analysts were expecting the company to break even on revenue of $215 million. Software and services accounted for 84% of revenue, and only $9 million came from sales of handheld devices, compared with $62 million last year. The company had double-digit growth in software and services billings for the second consecutive quarter.
"We achieved records in software and services revenue and total company gross margin; breaking the records we set last quarter," said Executive Chairman and CEO John Chen. "We expanded our position in key verticals and geographies, with many new partners and highly competitive customer wins."
Investors are beginning to recognize that BlackBerry's strategy of leveraging its reputation for the security of its handhelds to provide security for an exploding diversity of connected devices is working. Looking forward, the company maintained its guidance for positive non-GAAP EPS and free cash flow for the year.
Stitch Fit beats in first public report
Subscription-based online apparel vendor Stitch Fix reported quarterly results for the first time since becoming a public company, and despite beating analyst expectations by a small amount, the stock dropped 9.8%.
Revenue grew 25.2% to $295.6 million, just barely above the consensus estimate of $295 million, and EPS came in at $0.04, compared with expectations of $0.03 in per-share earnings. The active client count increased 30% year over year to 2.4 million, adding about 200,000 customers since the end of July.
Perhaps of concern to investors was a 1.4% decrease in net revenue per user to $433 for the full year. Gross margin also fell from 46.6% to 43.7%, but the company attributed both declines to entries into new markets for men's wear and plus sizes. Men tend to make purchases less often, and the lower volumes in new categories meant higher costs relative to the company's core women's wear line. Selling, general, and administrative costs rose 43% as the company increased hiring and advertising. The company expects gross margin in the current quarter to decline sequentially due to clearance items and higher shipping costs of cold weather clothing.
Despite today's sell-off, investors still appear to believe in the business, with the stock up 47% since its close on the first day of trading last month. Indeed, the investments in growth into new categories and in advertising to build awareness would seem normal for any consumer business in such an early stage, and perhaps realization of that led to the stock recovering from a steeper loss earlier in the day.
