Why J.C. Penney, Baidu, and Expedia Slumped Today

Markets Motley Fool

The stock market soared on Friday, led by generally strong results among the largest technology names in online search, e-commerce, and office productivity software. Major market benchmarks climbed, with the tech-heavy Nasdaq Composite posting the largest gain. Meanwhile, favorable economic signs continued to create a positive mood among market participants, but some companies were unable to participate in the rally. J.C. Penney (NYSE: JCP), Baidu (NASDAQ: BIDU), and Expedia (NASDAQ: EXPE) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

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Penney warns of tough times ahead

J.C. Penney plunged 16% after the retailer provided an update on its third-quarter performance. Penney said that comparable-store sales will rise just 0.6% to 0.8% for the quarter following the company's decision to clear out slow-moving inventory in key areas like women's apparel. CEO Marvin Ellison said that the impact of the move was positive in improving performance, but liquidation acceleration efforts resulted in a substantial boost to cost of goods sold, weighing on profit. Penney expects to lose $0.40 per share to $0.45 per share this quarter, and full-year comps are expected to be flat to down 1%. That change in outlook forced the retailer to reduce its full-year earnings forecast to a barely profitable $0.02 to $0.08 range. All of this makes the holiday season a make-or-break period for Penney, and if it proves less than entirely successful, many will wonder if the retailer will survive 2018 as a going concern.

Baidu disappoints

Baidu fell 8% in the wake of its third-quarter earnings release late Thursday. The Chinese search engine giant said that total revenue was up 29% from the year-ago quarter, helping its adjusted profit climb by more than 160%. The company's mobile business continues to gain in importance, and now accounts for nearly three-quarters of total revenue. Yet despite the positive developments, some investors seemed nervous about the slowing pace of growth as Baidu matures, and a fourth-quarter outlook for year-over-year growth of as little as 22% fed those fears. Others simply saw the drop as a natural market reaction, given that the stock had gained nearly 60% in 2017 prior to the news. 

Expedia stays home

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Finally, Expedia finished the day down 16%. The online travel service's third-quarter results showed dramatic slowdowns in growth across key metrics, stoking concerns that the company's long period of success could be coming to a close. Hotel room-nights were up 16% from year-ago levels, but that growth rate was only half what Expedia posted last year, and gross bookings gains of 11% looked similarly lackluster. Pundits had already predicted that the quarter would be tough for travel stocks, given the hurricanes that hit the Gulf Coast, the U.S. Southeast and the Caribbean -- but the extent of the slowdown was still shocking. Investors will be watching the next sets of results carefully to determine if Expedia can bounce back from its troubles.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu. The Motley Fool has a disclosure policy.