Wall Street enjoyed big gains on Tuesday, with the Dow Jones Industrial Average rising nearly 400 points and other major stock indexes seeing jumps in the 1% to 1.5% range. Market participants responded favorably to an apparent resolution to disagreements in Washington over government funding, and more promising views on the overall economy also bolstered sentiment. Yet some companies had bad news that caused their share prices to fall. Molson Coors Brewing (NYSE:TAP), Xeris Pharmaceuticals (NASDAQ:XERS), and Varonis Systems (NASDAQ:VRNS) were among the worst performers. Here's why they did so poorly.
Molson falls flat
Shares of Molson Coors Brewing lost more than 9% after the beer maker reported its fourth-quarter financial results. Molson suffered a 1.5% drop in worldwide brand volume, but the company's adjusted earnings per share climbed more than 35% from year-earlier levels. Yet what seemed to spook investors the most was news that Molson would have to restate previously issued financial statements from 2016 and 2017, due to the existence of a material weakness in internal controls over financial reporting that resulted in errors in income-tax accounting. Until the full extent of the restatements is clearer, it could be difficult for investors to regain confidence in how well Molson Coors has done in recent years.
Xeris sells some shares
Xeris Pharmaceuticals saw its stock drop 21.5% following the specialty pharmaceutical company's announcement that it would do a secondary public offering of stock. The registration statement governing the sale included 5 million shares in the offering, with an additional 750,000 share allotment offered to the underwriters of the secondary offering. Xeris said it expects to use the proceeds to support the commercial launch of its Gvoke HypoPen product, but with the announcement coming when Xeris shares are at their lowest levels since its mid-2018 IPO, shareholders were especially unhappy with the timing of the offering and the resulting potential dilution.
Varonis looks less secure
Finally, shares of Varonis sank nearly 14%. The data security and analytics specialist said that revenue grew 20% in the fourth quarter of 2018, but the pace of growth slowed from previous periods. Moreover, a further slowdown seems likely, as Varonis said that it expects 2019 revenue growth of just 10% to 13% in 2019, and the company won't produce nearly as much adjusted profit as those following the stock had anticipated. The sales slowdown comes as Varonis moves away from perpetual license sales toward a recurring-revenue model, but the question remains whether the shift will attract more customers in the long run.