Why Gogo, Coach, and Ballard Power Systems Tumbled Today

The broad stock market performed quite well on Tuesday, but these stocks got left behind. Find out why.

Dan Caplinger
Dan Caplinger
Apr 29, 2014 at 8:35PM

Tuesday continued the stock market's impressive run, with a number of companies reporting solid earnings and improving overall investor sentiment. Yet even though major market indexes rose about half a percent on the day, Gogo (NASDAQ:GOGO), Coach (NYSE:TPR), and Ballard Power Systems (NASDAQ:BLDP) weren't nearly as fortune, suffering substantial declines as a result of negative news affecting the companies.

Source: Gogo.

Gogo plunged 29% after news that the in-flight Internet provider will have to deal with a new major competitor. Last night, AT&T said it would offer a rival Internet service to airline passengers, with plans to give 4G service with the assistance of partner Honeywell. Gogo will have about a year and a half to secure its first-mover advantage, as AT&T hopes to start making its service available in late 2015. Gogo investors fear that at best, the company won't be able to charge as much as it currently does in fees, and at worst, customers might choose the better-known AT&T service over its less powerful brand name.

Source: Coach.

Coach fell 9% after the handbag and accessories retailer posted a big drop in its North American sales in its quarterly results. Although international sales rose 14%, same-store sales in North America plunged 21%, with Coach having thus far proven unable to deal with strength from its main competitors in the accessories space. Without any confidence that Coach will be able to stand up to its rivals in the long run, Coach shareholders weren't willing to reward the retailer even for beating earnings estimates by more than 10%. Unless Coach can dramatically ramp up its international presence to an even greater extent, it'll be problematic for the retailer to recover its past glory as a luxury retailer.

Ballard Power Systems dropped almost 10% after the fuel-cell company reported quarterly results and future guidance that disappointed shareholders. Revenue climbed 13%, but that was far slower than the 20% to 25% growth rate investors were hoping to see, especially given the success Ballard and its partners have had in selling systems lately. Ballard's net loss did narrow by more than half, and recent transactions have made the company optimistic about its future. But as with many high-growth stocks, Ballard Power Systems needs to do an even better job of taking full advantage of the opportunity in fuel-cell systems right now if it wants to avoid a repeat of some of the company's past disappointments.