Why Beyond Meat, Lovesac, and CymaBay Therapeutics Slumped Today

The stock market didn't do a whole lot on Tuesday, finishing largely lower after having started the session on a more upbeat note. With expectations that the Federal Reserve will have to come to the rescue to keep the U.S. economy growing at a healthy pace, investors don't have much to do except wait and see whether the central bank will actually follow through with interest rate cuts in the near future. Some companies had to deal with headwinds that sent their shares down. Beyond Meat (NASDAQ: BYND), Lovesac (NASDAQ: LOVE), and CymaBay Therapeutics (NASDAQ: CBAY) were among the worst performers. Here's why they did so poorly.

JPMorgan has enough of Beyond Meat

Continue Reading Below

Shares of Beyond Meat plunged 25% after stock analysts at JPMorgan gave negative views on the plant-based meat substitute producer. JPMorgan cut its rating on the stock from overweight to neutral, and raised its price target by $1 to $121. For the most part, the analysts simply believed that the stock's valuation had risen too far, too quickly, and given that its price had climbed well above the price target, a downgrade was merely consistent with its previous view. Some criticized JPMorgan's call given that the institution acted as lead underwriter for Beyond Meat's IPO, but the real question for long-term investors is whether the company's business model will deliver bullish fundamentals over time.

Lovesac's slowing sales disappoint investors

Specialty furniture provider Lovesac saw its stock drop 23% following the release of its fiscal first-quarter financial results. Lovesac's numbers looked impressive at first glance, with a 53% rise in net revenue coming largely from a 43.5% increase in comparable sales. CEO Shawn Nelson applauded the fact that the company managed to produce those top-line gains with only a 22% jump in spending on marketing, and he believes that Lovesac will keep investing to improve its infrastructure and find ways to offset tariff-related costs. Yet the fact that its sales rate fell more than 10 percentage points from last quarter's figure seemed to make shareholders fear that the company's high-growth days might be coming to an end more quickly than hoped.

CymaBay reports discouraging trial results

Finally, shares of CymaBay Therapeutics plummeted more than 45%. The biotech specialist released results from a phase 2b trial of its seladelpar treatment for patients with nonalcoholic steatohepatitis, and the news wasn't what investors had wanted to see. CymaBay had set a primary endpoint related to relative change in liver fat content compared to placebo, and seladelpar failed to show statistically significant reductions in that area. The treatment did show some meaningful reductions in markers of liver injury, and that encouraged some researchers about seladelpar's prospects. For investors, though, the news was a setback, and CymaBay will have to figure out how best to move forward from here.

Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has quadrupled the S&P 500!*

Tom and David just revealed their ten top stock picks for investors to buy right now.

Click here to get access to the full list!

*Stock Advisor returns as of June 1, 2019.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.