Tuesday was a strong day for the stock market, and the Dow Jones Industrials climbed more than 100 points to come once again within spitting distance of the 20,000 mark. Other major market benchmarks climbed even more sharply on a percentage basis as investors generally celebrated encouraging results from companies announcing earnings and on the macroeconomic front. Yet even though the overall market was higher, some stocks missed out on the rally, and Fortuna Silver Mines (NYSE: FSM), Straight Path Communications (NYSEMKT: STRP), and BT Group (NYSE: BT) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they dropped today.
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Fortuna sells shares to raise cash
Fortuna Silver Mines dropped 11% after announcing late Monday that it would sell shares of its stock to raise cash. The silver specialist said it had reached an agreement with underwriters to purchase about 10.3 million shares of stock for $6.30 per share, bringing total proceeds of about $65 million. Fortuna intends to use the proceeds for general working purposes, with the expectation that the deal will close in early February. The timing of the deal comes after Fortuna had seen its stock bounce by more than 35% from its lows in December, as the prospects for recovery in commodities markets have looked brighter than they did late last year. Even with today's drop, Fortuna is still up more than 20% over the past month.
Straight Path prepares for an offering
Straight Path Communications fell 6% in the wake of its announcement that it has filed a shelf registration statement with the U.S. Securities and Exchange Commission. The shelf offering will allow Straight Path to sell up to 1.25 million shares of its Class B stock at some point in the future, with the option of allowing the wireless spectrum license holder to time sales in a way that optimizes the amount of proceeds it collects. Based on current prices, the offering could bring in between $45 million and $50 million for Straight Path, which has been looking at strategic options for its wireless spectrum holdings. As CEO Davidi Jonas said, "We have recognized that potential access to the capital markets will provide increased opportunities for our company," and that could give Straight Path more choices to consider looking ahead.
BT Group faces higher costs
Finally, BT Group lost more than 20%. The U.K.-based telecommunications company has been dealing with mistakes related to accounting practices at its Italian division, and investors have worried that the company might not have made as much money in Italy as it had previously reported. Today, BT Group said the problems in Italy had been far worse than it had initially expected, so it nearly quadrupled its loss estimate related to the issue to about 530 million pounds, which, at current exchange rates, is about $660 million. Given the miscalculation, some BT shareholders now worry that the eventual total losses related to the accounting problems might well grow further, which explains the much larger extent of the drop compared to the actual amount of the charge.
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