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Why DISH Network, Gogo, and Hertz Global Holdings Slumped Today

By Dan Caplinger - May 8, 2018 at 4:32PM

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Find out how credit concerns affected one of these companies.

The stock market dealt with continued volatility on Tuesday, with investors uncertain how to react to a mix of earnings and geopolitical news. Throughout most of the day, market participants were trying to predict whether the Trump administration would move forward with its plans to withdraw the U.S. from the nuclear deal with Iran, and major benchmarks stayed in a relatively tight range with a downward bias during the morning and early afternoon. After the expected announcement, the Dow fell to a triple-digit loss late in the afternoon, but it recovered by the end of the session. Adding to the gloominess was bad news regarding some key individual stocks. DISH Network (DISH -3.32%), Gogo (GOGO -2.49%), and Hertz Global Holdings (HTZG.Q) were among the worst performers on the day. Here's why they did so poorly.

DISH sees more defections

Shares of DISH Network dropped 12% after the company announced its first-quarter financial results. The satellite video and connectivity provider said that revenue was down 6% compared to its year-ago sales, driven largely by a decline of about 380,000 television subscribers over the past 12 months. The company's Sling TV skinny bundle product has done well, with 91,000 new net subscribers in just the past three months. Yet it lost about 185,000 traditional DISH TV subscribers during the quarter, bringing net losses for the three-month period to 94,000. That trend is bringing revenue per user down, and it could create further long-term challenges for DISH in trying to get back toward a growth trajectory.

Convention hall with display for DISH, with corporate logo on the side of a mock house and window showing television display.

Image source: DISH Network.

Gogo gets a credit downgrade

Gogo stock plunged nearly 36% in the wake of more bad news for the in-flight internet service provider. Last week, Gogo began a descent after projecting in its first-quarter financial report that it wouldn't be able to reach its initial target for pre-tax operating earnings for the year. Technical issues related to its 2Ku next-generation network will cause some delays for Gogo. Now, bond rating agency Moody's followed up by cutting its rating on Gogo from B3 to Caa1, indicating a substantial risk of potential default and adding a negative outlook that could lead to further rating decreases in the future. Unless Gogo corrects its operational problems quickly, the company could run out of money at a key moment as it tries to move forward.

Hertz drives lower

Finally, shares of Hertz Global Holdings fell 19%. The rental car specialist reported solid revenue gains of 8% from year-ago levels, but net losses were almost as bad as last year's tally and substantially underperformed what most investors were looking to see. Hertz is continuing to make strategic investments in an effort to promote growth through improved IT capabilities, fleet-management systems, and advertising and marketing efforts. Yet shareholders don't seem particularly willing to wait for a payoff, and so far, the benefits of Hertz's moves haven't shown up in its financial results. Until they do, Hertz shares could see more volatility.

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Stocks Mentioned

DISH Network Corporation Stock Quote
DISH Network Corporation
DISH
$17.76 (-3.32%) $0.61
Hertz Global Holdings, Inc. Stock Quote
Hertz Global Holdings, Inc.
HTZG.Q
Gogo Inc. Stock Quote
Gogo Inc.
GOGO
$15.28 (-2.49%) $0.39

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