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Why Netflix, Arrowhead Research, and Trina Solar Tumbled Today

By Dan Caplinger – Mar 24, 2014 at 8:30PM

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Stock markets overall didn't perform well Monday, but these stocks did even worse than the broader market. Find out why here.

The stock market finished lower on Monday, with initial enthusiasm giving way to concerns about valuations in the five-year-old bull market. Yet although most broad-based indexes escaped with only minimal losses, Netflix (NFLX -1.12%), Arrowhead Research (ARWR 0.99%), and Trina Solar (NYSE: TSL) took much more damage in the day's trading.

Netflix fell 7%. Many investors pointed to news that Apple (AAPL 1.37%) and Comcast (CMCSA -2.00%) could be in talks to create a television service that would potentially compete against the streaming giant, but Netflix investors should also bear in mind that Monday featured a general exodus away from quick-rising momentum stocks across all industries. Just as biotech stocks sold off heavily after seeing huge gains, Netflix has soared recently, and a pullback isn't worth of panic at this point -- especially given the difficulties that Apple and Comcast would have in completing a deal.

Arrowhead Research plunged 16% amid general carnage in the biotech arena, despite its having made a positive announcement this morning. The company said this morning that it started the dosing regimen in its phase 2a trial of its hepatitis-B candidate treatment ARC-520. The company hopes that it can follow in the footsteps of other successful players in the RNA-interference realm, generating potentially groundbreaking treatments that manipulate the body's own genetic code to assist in treatment. Yet with investors generally cooling on the prospects for speculative biotech companies, Arrowhead got caught in the crossfire after huge gains over the past year.

Trina Solar fell 9% on a bad day for solar stocks, as momentum investors also looked askance at the big gains in solar companies both in the U.S. and China. Yet positive news from rival ReneSola showed just how much improvement Chinese solar companies have seen lately, as big gains in demand for solar modules have pulled several players in the industry toward profitability. Pullbacks in fundamentally solid industries can be buying opportunities, and the prospects for solar still look bright on a long-term basis.

Dan Caplinger owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Netflix. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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