Wall Street had another good session on Tuesday, with favorable earnings reports from some of the nation's most successful technology companies helping to lift major benchmarks by 1% or more. Investors haven't forgotten about some of the potential pitfalls that could derail the recovery, including both geopolitical and macroeconomic concerns. Yet traders seem to want to see the market test its all-time highs before deciding whether the correction could turn into a full-fledged bear market reversal. Some individual stocks, however, missed out on the good times. GoPro (NASDAQ:GPRO), Apellis Pharmaceuticals (NASDAQ:APLS), and Hertz Global Holdings (NYSE:HTZ) were among the worst performers on the day. Here's why they did so poorly.
GoPro might not get a rescue
Shares of GoPro fell almost 10% as investors weighed the possibilities that the action-camera specialist might not be able to attract a takeover candidate. The stock had climbed over the past couple of trading sessions after those following GoPro had suggested that a buyout bid could fetch as much as $1 billion, implying a valuation of close to $8 per share. Yet today, analysts at Longbow Research suggested that the odds of such a buyout were only 60-40, and investors didn't seem confident that an assessment of just over break-even probabilities of an acquisition bid justified the risk of holding shares of the flagging camera maker amid strong competition.
Apellis raises money
Apellis Pharmaceuticals stock dropped nearly 17% after the company announced that it would do a secondary offering of stock to raise cash. The biopharmaceutical specialist said that it would sell 5 million shares of stock, hoping to raise cash for use in developing and studying its C3 inhibitor therapies. The offering would boost the number of shares outstanding for the small company by about 10%, representing a not-insignificant amount of dilution for existing shareholders. With the stock having touched all-time highs since its IPO last October, though, it wasn't surprising to see Apellis take the opportunity to strengthen its cash reserves, as many clinical-stage biotechs do.
Hertz hits the brakes
Finally, shares of Hertz Global Holdings lost 7%. Those following the stock attributed the loss to an announcement from car-sharing platform specialist Turo that it would bring on independent car rental companies to offer vehicles to customers. If Turo gains traction, then the move could threaten Hertz's margins by making it easier for smaller rental car operators to compete in key markets. Hertz has made its own moves in the car-sharing arena, but investors are clearly worried that it won't be able to establish any type of competitive moat in the fast-moving space, and that could eat into its market share over the long run.