Thursday was generally a positive day on Wall Street, as gains for the Dow Jones Industrial Average reflected new optimism about the U.S. economy. Even with substantial increases in interest rates over the past couple of years from the Federal Reserve, investors have seen few signs that higher financing costs are putting much of a crimp in levels of economic activity. If anything, many companies seem to be thriving from higher rates, especially those in the financial industry. Yet some stocks still weren't able to participate in the rally. Bed Bath & Beyond (NASDAQ:BBBY), Geron (NASDAQ:GERN), and Canopy Growth (NYSE:CGC) were among the worst performers on the day. Here's why they did so poorly.
Why BB&B fell out of bed
Shares of Bed Bath & Beyond plunged 21% after the company reported poor financial results in its fiscal second-quarter report. The retailer of home goods surprised investors by reporting a 0.6% drop in comparable sales, which contributed to flat overall revenue and earnings that were only about half as much as the company brought in during the previous year's period. Bed Bath & Beyond tried to emphasize the fact that its digital channels experienced solid growth, but the fact that store-based sales were down mid-single-digit percentages only emphasized the long-term challenges that the retailer faces in an age of e-commerce and home delivery of essential goods.
Geron loses a key partner
Geron stock plummeted 63% in the wake of news that a major partner in the healthcare space had decided to end their collaboration. Johnson & Johnson's Janssen Biotech business said that it will terminate a partnership under which it had licensed the rights to candidate cancer treatment imetelstat, having performed a strategic review of its portfolio to determine its highest priorities for future growth. The move returns all rights to imetelstat to Geron, but even though Geron has high hopes for the treatment in further clinical trials, investors seem nervous about whether J&J's move signals that there could be something to worry about with imetelstat's prospects.
Canopy Growth gets its deal done
Finally, shares of Canopy Growth fell 5%. The Canadian cannabis company said late yesterday that shareholders had approved the sale of 104.5 million shares and 139.7 million warrants to Constellation Brands (NYSE:STZ) for roughly $4 billion. As important as many investors believe the deal is for Canopy Growth, it does represent a per-share price that's more than $10 below where the marijuana company started the day. Moreover, the warrants in the deal give Constellation the right to take a controlling interest in Canopy, and it can exercise 88.5 million of them at a price of 50.40 Canadian dollars per share, equivalent to roughly $39 per share at current exchange rates. Given that overhang of dilution, it's not surprising to see Canopy Growth take a pause in its big upward move over the past couple of months.