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Why Pier 1 Imports, Zoom Video Communications, and Sally Beauty Holdings Slumped Today

By Dan Caplinger - Jun 24, 2019 at 4:33PM

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Find out what sent these stocks to significant losses.

Monday was a relatively quiet day on Wall Street. Investors were content to consolidate recent gains that have put June in position to be the best month for the market in nearly four years, although some uncertainty about rising geopolitical tensions between the U.S. and Iran weighed a bit on sentiment. Even though most indexes were little changed, some stocks lost significant ground. Pier 1 Imports (PIRRQ), Zoom Video Communications (ZM 2.27%), and Sally Beauty Holdings (SBH 1.78%) were among the worst performers. Here's why they did so poorly.

Pier 1 has the reverse-split blues

Shares of Pier 1 Imports plunged 32%, continuing their decline following last week's implementation of a 1-for-20 reverse stock split. Pier 1 had seen its stock price fall well below the $1-per-share mark, triggering potential delisting from the New York Stock Exchange without action from the company. The reverse split sent the share price into the teens, but the fundamentals underlying the home furnishings specialist's business remain weak, and bearish investors took the opportunity to redouble their efforts in betting against the company. With the retailer having already closed dozens of store locations and looking at even more future closures, it's unclear how much more Pier 1 can do to bounce back from its latest difficulties.

Falling stock charts superimposed over digital map of the world

Image source: Getty Images.

Zoom gives back some of its gains

Zoom Video Communications saw its stock fall 11%, pulling back from a post-IPO surge that had taken it up as much as 70% from its first-day closing price. Investors focused a lot of their negative energy today on some of the most successful stocks over the past several months, and earlier in June, Zoom followed up on the hype generated by its initial public offering by releasing extremely encouraging earnings results. Even with the pullback, Zoom's supporters still see a lot of potential for the business to keep generating momentum and meet its goal of becoming the go-to provider of video conferencing and communications services.

Sally Beauty deals with e-commerce

Finally, shares of Sally Beauty Holdings dropped 17%. The beauty supply specialist became the latest victim of moves from e-commerce giant Amazon.com (AMZN 4.11%), which announced that it had come out with an online beauty store that will let professionals in the hair styling and esthetics businesses purchase supplies for their businesses. That's a direct shot against Sally Beauty's business model, and shareholders are scared that if Amazon puts real effort into maximizing profit from this niche, it could take away a massive chunk of Sally Beauty's business. Skeptics might argue that those who would go to Amazon have already done so without a formal storefront, so it'll be interesting to see what (if any) effect the competition will have on Sally Beauty's numbers.

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Stocks Mentioned

Pier 1 Imports, Inc. Stock Quote
Pier 1 Imports, Inc.
PIRRQ
Sally Beauty Holdings, Inc. Stock Quote
Sally Beauty Holdings, Inc.
SBH
$14.90 (1.78%) $0.26
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$90.94 (2.27%) $2.02
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,307.37 (4.11%) $91.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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