Thursday was another up-and-down session on Wall Street, and despite having moved broadly higher early, several key stock benchmarks finished the day down. Arguably most alarming was the underperformance in the small-cap Russell 2000 index, which finished lower by more than 1% and suggested more nervousness about domestic economic conditions for 2019. Elsewhere, market participants continued to fret about trade, and some companies had specific issues that took shares down substantially. Aurora Cannabis (ACB 4.92%), Tailored Brands (TLRD), and Limelight Networks (EGIO 1.18%) were among the worst performers on the day. Here's why they did so poorly.
Aurora Cannabis makes a purchase
Shares of Aurora Cannabis finished lower by 7% after the Canadian marijuana company announced another strategic investment. Aurora spent 10 million Canadian dollars, or about $7.5 million in U.S. dollars, to buy convertible debt that Calgary-based cannabis peer High Tide offered in a private placement. Under the terms of the debt, Aurora will receive 8.5% interest along with the right to convert the debt into common shares of High Tide at an exercise price of CA$0.75 per share, or 50% higher than High Tide's last equity issuance. With a two-year maturity on the debt, Aurora's getting a solid return on investment as long as High Tide's able to repay it, but investors seem to be focused more on the fact that Aurora itself hasn't attracted any strategic moves from consumer giants seeking a partnership in the budding marijuana sector.
Tailored Brands gets ripped apart
Tailored Brands stock plunged 30% in the wake of the business apparel specialist's release of fiscal third-quarter financial results. The parent of the Men's Wearhouse and Jos. A. Bank lines of retail stores reported an overall rise of 2.3% in comparable sales compared to year-earlier levels, with gains at all of the company's four retail segments. Yet despite posting better earnings than expected, Tailored Brands gave downbeat guidance for the fourth quarter, which included expected declines in comps at Men's Wearhouse and an adjusted loss of $0.24 to $0.29 per share. That led to a cut in projected full-year earnings from its old range of $2.35 to $2.50 per share to a new one of $2.30 to $2.35 per share, and that left investors concerned about Tailored Brands' performance during the key holiday shopping season.
Lights go out at Limelight
Finally, Limelight Networks saw its shares drop 19%. The cloud services provider warned that its full-year 2018 results wouldn't be quite as good as previously expected, cutting anticipated adjusted earnings by about $0.04 to $0.06 per share to a new range of $0.10 to $0.11 per share. New revenue projections for $195 million to $196 million in revenue were down by $5 million to $7 million from earlier guidance. CEO Bob Lento tried to reassure investors that the reduction resulted from repricing measures that should lead to greater growth in 2019, but shareholders weren't entirely convinced that 2019 projections will live up to their expectations either.