Wednesday looked like a calm day on Wall Street, as indexes didn't end the session with particularly large moves from where they began. Yet even though major market averages didn't see big changes, there was plenty of activity at the individual stock level, especially because of the ongoing progress of earnings season. Some stocks saw significant losses due to adverse news. Chesapeake Energy (CHKA.Q), Diamondback Energy (FANG 0.32%), and Red Robin Gourmet Burgers (RRGB 1.59%) were among the worst performers. Here's why they did so poorly.
Chesapeake breaks the buck
Shares of Chesapeake Energy plunged 29%, falling below $1 as investors continued to weigh the implications of its most recent earnings report. The energy stock drop 18% Tuesday after posting wider losses than expected and seeing production output fall. In response, Chesapeake said it would have to cut back on spending, and the addition of language questioning whether the company can continue as a going concern suggested that the energy player might be nearing the end of its rope. If conditions in the industry don't improve soon, then Chesapeake might find itself having to do a reverse split or even delisting entirely from the stock exchange.
Image source: Chesapeake Energy.
Diamondback gets bitten
Diamondback Energy also took a hit from the tough energy industry environment, seeing its shares lose more than 14%. The exploration and production company said that adjusted net income fell 12% from year-ago levels, with average realized prices of just under $52 per barrel of oil and $0.62 per thousand cubic feet of natural gas. Diamondback does a lot of business in the Permian Basin, and it's difficult to move natural gas out of that area because of the huge levels of production going on in the region. Diamondback's plans for capital spending were a bit more ambitious than Chesapeake's, but Diamondback is still ready to make spot reductions in expenditures if energy markets don't behave the way the company would like.
Red Robin has more work to do
Finally, shares of Red Robin Gourmet Burgers sank 12.5%. The casual-dining chain posted positive comparable-restaurant sales in its third-quarter financial report, but adjusted net losses widened from year-ago levels as various margin figures deteriorated. Moreover, Red Robin said that it would suspend its refranchising program, citing the need to do some advance work first before being able to unlock value from refranchise efforts. The restaurant chain has seen encouraging results from its off-premise and catering sales, but it's going to take more work before Red Robin can consistently be profitable.
