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Why Peloton Interactive, Plug Power, and Cara Therapeutics Slumped Today

By Dan Caplinger - Dec 3, 2019 at 4:32PM

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On a tough day on Wall Street, these stocks got hit especially hard.

Major benchmarks suffered significant losses on Tuesday, as investors had to deal with a reversal of fortune in ongoing trade negotiations between the U.S. and China. Market participants had gotten used to the idea that the two nations might be able to come up with a phased-in agreement on some common issues, but the White House suggested that the U.S. could potentially wait on a deal until after the next presidential election in November 2020. Adding to the negative sentiment was bad news from a host of individual companies. Peloton Interactive ( PTON -3.98% ), Plug Power ( PLUG -7.88% ), and Cara Therapeutics ( CARA -4.33% ) were among the worst performers. Here's why they did so poorly.

Peloton takes a tumble

Shares of Peloton Interactive dropped 9% after its latest advertising campaign got a bad reception on social media. The interactive exercise equipment manufacturer's ad was intended to encourage holiday purchases of Peloton equipment, but many prominent figures on Twitter and elsewhere found its premise to be flawed at best. Even with the negative publicity, though, it's questionable whether most of those poking fun at Peloton would've bought its equipment anyway, and Peloton's recent financial results point to growing adoption and rising usage figures that should win out over one-day declines.

Peloton stationary bike with video screen above handlebars.

Image source: Peloton Interactive.

Plug loses some power

Plug Power's stock fell 11% after the fuel cell and hydrogen engine specialist announced that it would do a secondary offering of stock to raise capital. Plug Power said that it will sell up to 40 million shares, dramatically increasing its overall outstanding share count of around 245 million and raising new concerns about diluting shareholders. Throughout the company's history, investors have had high hopes about its potential to revolutionize power generation with its fuel cell technology. Yet time and time again, those hopes haven't led to tangible results, and now, Plug Power will need still more investor capital in its efforts to find success at last.

Cara gets mixed results

Finally, shares of Cara Therapeutics plunged more than 34%. The biopharmaceutical company released phase 2 trial results that on their face seemed to be positive, as its oral Korsuva treatment for advanced chronic kidney disease patients met its primary endpoint of significant changes in a scale measuring intensity of itching. However, Korsuva failed to demonstrate statistically significant improvements on two secondary endpoints, including percentage of patients seeing a set improvement in itching intensity scale results and self-assessed quality of life metrics. Despite the mixed results, Cara intends to move forward with a phase 3 study, and that could prove to be the turning point for whether oral Korsuva has a future with the clinical-stage biopharmaceutical company.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Plug Power Inc. Stock Quote
Plug Power Inc.
PLUG
$36.71 (-7.88%) $-3.14
Cara Therapeutics, Inc. Stock Quote
Cara Therapeutics, Inc.
CARA
$12.61 (-4.33%) $0.57
Peloton Interactive, Inc. Stock Quote
Peloton Interactive, Inc.
PTON
$42.25 (-3.98%) $-1.75

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

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