Please ensure Javascript is enabled for purposes of website accessibility

Why Overstock.com, Zogenix, and Mogu Slumped Today

By Dan Caplinger - Aug 26, 2019 at 4:36PM

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

One of these stocks continued to see fallout from recent executive moves.

Monday was a good day on Wall Street, as investors were pleased to see the U.S. take more conciliatory positions on trade issues with major foreign powers. Fears of a global recession are still present, but market participants acknowledge that if news out of Washington gets less confrontational, the odds of avoiding a slowdown should go up. However, some individual companies faced challenges that sent their share prices lower. Overstock.com (OSTK -1.04%), Zogenix (ZGNX), and Mogu (MOGU 0.47%) were among the worst performers. Here's why they did so poorly.

Overstock keeps giving up ground

Shares of Overstock.com continued their downward trend from last week, falling another 16%. Last week's move was prompted largely by the departure of founder and CEO Patrick Byrne, who left his leadership roles at the company after making controversial statements about his involvement in various political investigations. This morning, interim CEO Jonathan Johnson gave his view on the company's future, which still appears to be focused on making a transition toward cryptocurrency. Investors don't seem as comfortable about abandoning Overstock's original e-commerce business, and that appears to have fueled the stock's decline today.

Piles of Overstock boxes in front of a door.

Image source: Overstock.com.

Zogenix makes a buy

Drugmaker Zogenix saw its stock drop 16% after it announced an acquisition of a privately held industry peer. Zogenix said that it would pay $250 million to buy Modis Therapeutics, a biotech company that specializes in developing novel therapies for rare genetic diseases. Modis has a late-stage candidate treatment called MT1621 that's aimed at patients suffering from thymidine kinase 2 deficiency, and it's gotten FDA breakthrough therapy status. Yet not everyone thinks that Zogenix should have paid as much as it did for Modis, even though one of Zogenix's own treatment candidates has run into resistance from the U.S. Food and Drug Administration in recent months.

Mogu disappoints

Finally, shares of Mogu plunged 21%. The Chinese online fashion company saw gross merchandise value rise just 2.6% year over year in its fiscal first quarter, and total revenue was down almost 3% over the same period. Mogu did manage to narrow its net losses from the prior-year quarter, but the online retailer is still seeing a significant amount of red ink. There's plenty of competition in online retail in China, and the company faces a big hurdle to gain market share in a crowded space. Mogu just went public at the end of 2018, but its stock has plunged from its IPO levels, and investors seem to be running out of patience.

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

Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$27.54 (-1.04%) $0.29
Zogenix, Inc. Stock Quote
Zogenix, Inc.
ZGNX
MOGU Inc. Stock Quote
MOGU Inc.
MOGU
$2.15 (0.47%) $0.01

*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
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

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.