Please ensure Javascript is enabled for purposes of website accessibility

Why Box, Luckin Coffee, and Orchard Therapeutics Slumped Today

By Dan Caplinger - Jun 4, 2019 at 4:33PM

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

Find out why these stocks were among the few to lose ground on a winning day for the market.

Tuesday was a strong day on Wall Street, as investors reacted favorably to the idea that the so-called "Fed put" might finally be back in the market. Even as geopolitical and trade-related woes threatened to send the U.S. economy toward a possible recession, members of the Federal Reserve's governing board indicated that they stood ready to provide accommodation in monetary policy if signs of a slowdown began to emerge. Major market benchmarks picked up 2% or more, but some stocks missed out on the rally. Box (BOX -4.47%), Luckin Coffee (LKNC.Y -0.98%), and Orchard Therapeutics (ORTX -2.08%) were among the worst performers. Here's why they did so poorly.

Box sees a slowdown

Shares of Box dropped 4% after the cloud content management specialist posted disappointing results in its fiscal first-quarter report. Box said that revenue growth came in at 16% compared to the previous year's quarter, and it lost slightly less money during the period than most of those following the stock had expected. However, Box cut its forecast for full-year results, citing longer sales cycles in generating new business from major customers. In the long run, the cloud company believes that its patience should be rewarded with more loyal clients, but investors weren't willing to wait amid fears that cloud stocks might have come too far, too quickly.

Man on stage in front of a crowd, with Box Works logo behind and on podium.

Image source: Box.

Luckin cools off

Luckin Coffee saw its stock fall 4% as the Chinese coffee upstart paused in its recent rebound. The company had seen poor performance immediately following its IPO last month, but investors seemed to gravitate back toward Luckin as fears of weakening U.S.-China trade relations supported the idea that Chinese consumers might favor Luckin over Starbucks (SBUX -2.46%) if tensions remained high. Today's stock market rebound signals hope that a trade resolution might still be in the cards, and by giving Starbucks a chance to compete more effectively in China, it could conversely hurt Luckin's chances. Nevertheless, the Chinese market is big enough for both Luckin and Starbucks to succeed, and long-term shareholders in both companies could well see gains from current levels.

Orchard follows a familiar pattern

Finally, shares of Orchard Therapeutics plunged 16%. The biopharmaceutical company said that it would sell 9 million American depositary shares in a secondary public offering, with the intent of using the proceeds to fund ongoing development of candidate treatments, as well as the commercialization of its Strimvelis treatment for a rare disease known as ADA-SCID. Orchard shares had performed reasonably well coming into its latest earnings report about a week ago, and it's not unusual for companies in the pharmaceutical and biotech space to take advantage of favorable conditions to raise cash. Despite the dilution of shareholders from the move, the benefit for Orchard is that it should now be set up for continued growth without any further need to worry about liquidity in the immediate future.

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

Box, Inc. Stock Quote
Box, Inc.
$27.23 (-4.47%) $-1.27
Luckin Coffee Inc. Stock Quote
Luckin Coffee Inc.
$8.08 (-0.98%) $0.08
Orchard Therapeutics plc Stock Quote
Orchard Therapeutics plc
$0.47 (-2.08%) $0.01
Starbucks Corporation Stock Quote
Starbucks Corporation
$71.90 (-2.46%) $-1.82

*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.