Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The Dow Jones Industrials climbed almost 129 points today, closing at 15,747 and reaching a new all-time record level. Yet some stocks didn't join in the celebration, as Tesla Motors (TSLA -1.92%), Solazyme (TVIA), and VIVUS (VVUS) all posted drops of more than 10%. Let's look more closely to find out why these stocks fell so dramatically today.
Tesla Motors fell almost 15% in response to its earnings report last night. The electric-car company reported stronger adjusted profits and revenues than expected, with vehicle sales reaching the 5,500 mark and impressive gross margin gains to 21%. With such high demand, though, production has become a potential bottleneck, and investors are growing impatient with Tesla's inability to deliver cars at the pace at which customers would like to buy them. In the long run, Tesla's growth story remains intact, but today's drop is typical of high-growth companies dealing with equally high expectations.
Solazyme also posted a 15% decline, with many of the same issues facing the maker of renewable oils both for the energy industry and for personal-care products. The company has continued to see steady growth in revenue, but investors are impatiently waiting for commercial facilities in Brazil and the U.S. to reach their full potential. News that production at its Brazilian plant would be delayed by a quarter until early 2014 hurt the company's overall guidance and disappointed investors who were looking forward to faster growth. Again, these issues don't necessarily change Solazyme's long-term prospects, but they force investors to wait longer than they'd like.
VIVUS dropped by 12% after reporting another disappointing quarter of sales for its Qsymia obesity drug. Even though rival drug Belviq from Arena Pharmaceuticals (ARNA) hasn't performed much better, VIVUS is having to deal with the real likelihood that its long-anticipated revenue bump from Qsymia might never materialize. Despite substantial revenue from a licensing agreement, losses widened and cost-cutting measures cast an ugly pall over the company's future prospects.
