Why Oracle, Twitter, and Children's Place Slumped Today
Tuesday gave investors a nice bounce, with major benchmarks posting generally modest gains to offset some of yesterday's declines. Despite some ongoing concerns about tomorrow's interest rate decision from the Federal Reserve, as well as geopolitical and macroeconomic issues, market participants seemed generally comfortable with the prospects for continued benefits for companies from lower corporate tax rates and less regulation. Yet not every stock participated in today's gains, and some were down sharply. Oracle (NYSE: ORCL), Twitter (NYSE: TWTR), and Children's Place (NASDAQ: PLCE) were among the worst performers on the day. Here's why they did so poorly.
Oracle deals with disappointment
Shares of Oracle dropped more than 9% after the company reported its financial results from its fiscal third quarter. The database software giant reported a loss because of one-time charges stemming from changes in the tax laws, but what upset investors was Oracle's sales gains of only 6% overall. Oracle is counting on cloud-based services providing strong growth, but even the 32% rise in cloud revenue wasn't enough to satisfy those looking for more. With the company also seeing slowing growth in its share of the cloud, investors are concerned that Oracle's strategy to keep up with changing technology might not be as successful as they'd originally hoped.
Twitter leads social media lower
Twitter stock fell 10% in a broader-based sell-off throughout the social media arena. Concerns stem from growing fears about the vulnerability of user data in light of recent instances of what many would call inappropriate use of collected personal information. Congressional lawmakers are looking into the issue more deeply, and some believe that increased regulation is almost inevitable. Even though recent news centered on Twitter's primary rival, that doesn't mean that the microblogging specialist won't get caught up in the backlash if regulators decide to clamp down on perceived abuses of the relationship between social media companies and their users.
Children's Place gets a timeout
Finally, shares of Children's Place lost 8%. The children's retailer reported its fiscal fourth-quarter financial results, which included comparable-retail sales gains of 8.2% and a slightly larger overall revenue gain. Yet investors didn't seem satisfied even with those solid numbers, and guidance for the current quarter fell short of what many had hoped to see. Children's Place also said that it would increase its dividend by 25% and announced a new $250 million share repurchase program. It appears shareholders are more concerned about ongoing store closures and whether Children's Place can emerge from the retail industry slowdown stronger than ever.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool owns shares of Oracle and has the following options: short June 2018 $52 calls on Oracle and long January 2020 $30 calls on Oracle. The Motley Fool has a disclosure policy.