Wall Street has had its ups and downs in 2019, but some investors have mostly been feeling the downs. Several stocks have been cut in half this year heading into the final quarter, despite the S&P 500 hanging on to a 16% gain in 2019 through Thursday's close.
At Home (HOME), Rite Aid (RAD 24.00%), Tilray (TLRY), GameStop (GME 7.58%), and Stamps.com (STMP) have all seen their stock prices shed more than 50% of their value this year. The market has its top stocks, and these five investments are not making the cut. Let's go over what each company did to fall out of favor so far this year.
Image source: GameStop.
At Home: Down 50%
Some retail concepts fade over time, but every so often the fall from grace is swift. At Home seemed to be a hot retailer of home goods until a shocking financial report in early June sent shares reeling. Earnings fell woefully short of expectations, and comps surprisingly declined in its fiscal first quarter.
The chain that just a couple of months earlier was bubbling higher as a potential takeover candidate blamed adverse weather for its malaise, but lowered guidance for the balance of fiscal 2020 suggested that some of the storm clouds were internal. The lingering slump was confirmed three months later when its fiscal second quarter also treated investors to negative comps and another round of lowered goals.
Rite Aid: Down 51%
Being left at the altar -- twice -- can do a lot to wound your confidence. Rite Aid has struck out twice in deals to be acquired, and now that it has sold off some assets and is making a go of it as a swinging single, the market just isn't interested. Challenges continue for the drugstore operator, and a 1-for-20 reverse split to lift its stock price to meet exchange compliance requirements has backfired, as most reverse splits do.
Rite Aid shares did bounce back after a mixed quarterly report last week, but it is still in a pretty big hole. The shares have shed more than 80% of their value since investors forced the chain into calling off its combination with supermarket giant Albertsons last summer.
Tilray: Down 65%
Marijuana stocks were all the rage as restrictions and social stigmas eased through 2018, and Canadian grower Tilray was one of the shiniest stars. The stock would go on to peak at $300 -- a perfect game in bowling -- 13 months ago, only to then shed 92% of its value.
A lot of investors were chasing a handful of publicly traded marijuana investments last year, and many of last year's hot pot stocks have softened through 2019. Tilray's springtime gamble to expand beyond its home turf, where recreational use was legalized late last year, has puzzled investors. The stock's lack of near-term profitability also hasn't helped.
GameStop: Down 55%
We're not playing -- or, more importantly, buying -- video games the way we used to, and that's proving to be a challenging level for GameStop to get through with no cheat codes in sight. The leading retailer specializing in video games, consoles, and accessories has been struggling to woo growth investors. Income investors were shown the door when GameStop chose to suspend its generous payouts in June.
GameStop was once the envy of the strip mall with its high margins and low overhead, but as software increasingly gets delivered digitally we're seeing fewer physical sales of games. GameStop's highest-margin business has always been reselling secondhand games and gear, but that business is now endangered, with developers and publishers reaching directly to gamers.
Stamps.com: Down 53%
Stamps.com had a pretty sweet deal as the exclusive partner of the U.S. Postal Service for online postage, but everything changed after that arrangement was terminated earlier this year. The provider of digital postage and shipping solutions has had to rethink its strategy.
The good news is that there may be a light at the end of this wind tunnel. Stamps.com moved sharply higher this summer after boosting the guidance it had hosed down earlier this year. The stock has actually more than doubled since its springtime shocker, but the stock took such a beating back then that it's still trading for less than half of where it was when 2019 started.
