Please ensure Javascript is enabled for purposes of website accessibility

Why Zynga, Sierra Wireless, and Lions Gate Entertainment Slumped Today

By Dan Caplinger - Feb 9, 2018 at 4:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Find out what made these stocks miss out on a rally.

Friday was a rebound day for the stock market, with major benchmarks swinging back and forth between big gains and losses before settling on a finish in positive territory. The Dow closed the day with a 330-point gain, and other key indexes matched its roughly 1.5% rise. Yet the boost couldn't wipe out the impact of two 1,000-point-plus drops during the week, and many stocks lost even more ground on Friday despite the overall market's comeback. Zynga (ZNGA), Sierra Wireless (SWIR 4.85%), and Lions Gate Entertainment (LGF-A -0.53%) (LGF-B -0.55%) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Zynga can't win

Shares of Zynga finished down 5% as investors continued to parse through the mobile video game company's quarterly earnings report released earlier this week. Zynga had originally climbed after announcing record mobile revenue and bookings, which were higher by 32% and 18%, respectively, on a year-over-year basis. The launch of Words With Friends 2 and strong showings from Zynga Poker and other titles helped contribute to the gains. Yet after such a strong 2017, Zynga investors seem nervous about the sustainability of further share-price gains without even stronger fundamental business performance. Until that happens, Zynga shares could see ongoing choppiness.

Cutout for FarmVille showing animated farmer, vegetables, and barn.

Image source: Zynga.

Sierra Wireless disconnects

Sierra Wireless stock fell 14% after the technology company reported its fourth-quarter financial results. The Internet of Things specialist said that revenue climbed 13% from year-earlier levels, with particular strength not just in the IoT segment but also in serving enterprise customers more broadly. Yet despite assurances from CEO Jason Cohenour that future gains in recurring revenue are imminent, Sierra Wireless investors weren't satisfied with the pace of growth suggested in the company's guidance for the current quarter. The company will have to show that it can overcome temporary headwinds before some shareholders will feel confident in its long-term prospects.

Lions Gate can't satisfy investors

Finally, shares of Lions Gate dropped 13%. The entertainment and content provider reported strong sales gains and free cash flow growth, with solid earnings that exceeded expectations for most investors. Yet Lions Gate said it would probably take a year longer than it had initially projected to complete the company's expansion plans for its legacy businesses as well as the new businesses it got when it merged with Starz in late 2016. Bullish investors hope that the sacrifice in fiscal 2019 will pay off with heightened returns in fiscal 2020, but the stock's movement today suggests that more pessimistic investors who doubt the company's long-term strategy carried the argument, at least for now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Zynga Inc. Stock Quote
Zynga Inc.
Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
$9.50 (-0.53%) $0.05
Sierra Wireless, Inc. Stock Quote
Sierra Wireless, Inc.
$23.35 (4.85%) $1.08
Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
$9.01 (-0.55%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.