The sector rotation appeared to continue on Tuesday, as investors fled the most influential stocks in the Nasdaq Composite (NASDAQINDEX:^IXIC) in favor of stocks listed elsewhere. Even as other benchmarks held up well or even gained ground, the Nasdaq was down more than 150 points, or 1.3%, as of 2:30 p.m. EST.

When some of the best performers start to see signs of cracking, it often bodes poorly for the stock market as a whole. That's one concern that investors have about Beyond Meat (NASDAQ:BYND) and its big plunge on Tuesday. Yet elsewhere, Ulta Beauty (NASDAQ:ULTA) made shareholders quite happy with its latest strategic move to boost traffic and recover from the impacts of the COVID-19 pandemic.

A tough quarter for Beyond Meat

Shares of Beyond Meat got burned Tuesday afternoon, falling 16%. The maker of plant-based meat alternative products had a third-quarter earnings report that failed to leave investors satisfied.

Growth at Beyond Meat was beyond disappointing. Revenue climbed by less than 3% from year-ago levels. The company had no trouble wooing customers through its retail distribution channels, where sales were up 39% year over year. However, the COVID-19 pandemic crushed Beyond Meat's sales to its restaurant and foodservice partners. That segment suffered a 41% year-over-year decline in revenue.

As a result of the shortfall, Beyond Meat unexpectedly lost money. That wiped out a year-ago profit and raised some questions about the company's ability to execute as efficiently as possible during tough times.

In addition, shareholders had hoped to hear news of Beyond Meat's role in McDonald's (NYSE:MCD) new McPlant product line. CEO Ethan Brown wasn't responsive to analyst questions during the call, and that made some worry that Beyond Meat might not be as strong a partner with McDonald's as they'd hoped.

Three darts in the bullseye section of a dartboard.

Image source: Getty Images.

Ulta makes a big move

On the other hand, Ulta Beauty moved higher by nearly 8%. The beauty salon and products retailer has had a tough time of it during the coronavirus crisis, but a new strategic move with Target (NYSE:TGT) could turn things around in a hurry if things go well.

Ulta will open in-store shops within roughly 100 Target stores beginning in late 2021. The shops will be located near existing Target cosmetics sections, and while they'll be only a tiny fraction of the size of a full stand-alone Ulta store, the shops will feature tools for virtual product testing and specially trained Target workers to help customers.

Ulta will gain an entire new distribution channel through the partnership. The hope is that once Target customers get a taste of the Ulta experience, they'll be more likely to visit nearby full Ulta salon locations. Meanwhile, Target will get a well-known name brand within its store locations, adding another draw for the big-box department store retailer.

If things go well, then the concept could spread well beyond the first 100 stores. By joining forces, Ulta and Target will do everything they can to make sure their customers get the beauty guidance and products they need. Especially given Ulta's challenges as the pandemic hit the retail sector, the new strategic initiative has a lot of valuable growth potential.

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.