Please ensure Javascript is enabled for purposes of website accessibility

Why National Beverage, Tencent Music, and Bayer Slumped Today

By Steve Symington - May 14, 2019 at 4:26PM

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

See why these three stocks missed out on the broader market's rise on Tuesday.

Stocks rallied on Tuesday, but only recouped less than half of Monday's steep losses as investors tried to parse the implications of escalated trade tensions between the U.S. and China. In an apparent attempt to quell concerns that negotiations have failed, President Trump this morning called it "a little squabble," insisting he has an "extraordinary relationship with Chinese President Xi Jinping." Both the Dow Jones Industrial Average and the S&P 500 gained around 0.8%.

But not every stock participated in today's rally. Read on to learn why National Beverage (FIZZ -1.23%), Tencent Music Entertainment Group (TME 0.49%), and Bayer (BAYR.Y -0.50%) slumped.

A new skeptic for National Beverage

Shares of National Beverage dropped 4.7% after Jefferies analyst Kevin Grundy initiated coverage on the soft drink specialist with an underperform rating and a $45-per-share price target. For perspective, that target represents a roughly 17.5% discount from Monday's close.

Stock market charts in grey with a yellow arrow line indicating losses.

Image source: Getty Images.

To justify his bearishness, Grundy worries that sales of National Beverage's LaCroix varieties will slow in the face of new competitors like Pepsi's Bubly brand, leading to troublesome market-share losses for the company.

"We believe market share problems are structural and likely to drive downside to Street estimates," Grundy added.

Investors weren't impressed with Tencent Music's earnings beat

Tencent Music stock fell 6.2% in the wake of the Chinese music-streaming leader announcing mixed first-quarter results and an executive departure. 

Quarterly adjusted earnings arrived at $0.11 per American depositary share (ADS), edging out Wall Street's consensus estimates by $0.01 per share. But quarterly revenue climbed 39% year over year to 5.74 billion yuan, below the 5.8 billion yuan most analysts were modeling.

"Our businesses recorded healthy growth rates driven by product innovation, content diversification, and technological advancement," stated CEO Cussion Pang. "As our users increasingly consume music content through streaming services, we are riding on this trend to gradually transition into a pay-for-streaming model over the coming years."

In a separate press release late yesterday, Tencent Music announced the resignation of company co-president and director Guomin Xie, as well as the simultaneous promotion of fellow co-president and board member Zhenyu Xie to chief technology officer. The company cited "personal reasons," for Guomin Xie's decision to step down, but the executive turnover did it no favors in conjunction with its mixed report.

Bayer's latest legal headache

Shares of Bayer lost over 2% after a California court slapped it with a more than $2 billion verdict through a lawsuit brought by a couple claiming its Roundup product caused their cancer.

The 10-figure decision was the third and largest such penalty incurred in recent months by the German pharmaceutical and life sciences company, which acquired Roundup-maker Monsanto in a $63 billion merger only last year. Bayer still faces over 13,000 additional lawsuits alleging it failed to warn consumers of Roundup's carcinogenic risks.

Bayer, for its part, stated it was disappointed with the ruling and pledged to appeal, calling the verdict "excessive and unjustifiable."

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

Bayer Stock Quote
$16.86 (-0.50%) $0.09
National Beverage Corp. Stock Quote
National Beverage Corp.
$48.84 (-1.23%) $0.61
Tencent Music Entertainment Group Stock Quote
Tencent Music Entertainment Group
$4.11 (0.49%) $0.02

*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 service.

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 05/18/2022.

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.