Please ensure Javascript is enabled for purposes of website accessibility

Why GoPro, Apellis Pharmaceuticals, and Hertz Global Holdings Slumped Today

By Dan Caplinger – Apr 17, 2018 at 4:35PM

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

There are good reasons these stocks missed out on the rally.

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 (GPRO -1.20%), Apellis Pharmaceuticals (APLS 4.42%), and Hertz Global Holdings (HTZG.Q) 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.

View from GoPro camera on the left rear wheel of a mountain bike on a rock path on a clear day.

Image source: GoPro.

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.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has a disclosure policy.

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

Hertz Global Holdings, Inc. Stock Quote
Hertz Global Holdings, Inc.
GoPro, Inc. Stock Quote
GoPro, Inc.
$4.93 (-1.20%) $0.06
Apellis Pharmaceuticals, Inc. Stock Quote
Apellis Pharmaceuticals, Inc.
$68.30 (4.42%) $2.89

*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 09/30/2022.

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.