Why Toll Brothers, e.l.f. Beauty, and Momo Slumped Today

The stock market surged higher Tuesday, as investors looked to regain some of the considerable losses from late last week. The major benchmarks gained three-quarters of a percent or more, with the technology-laden NASDAQ index leading the markets higher with a more than 1% gain, after falling further in previous market sessions. Even though sentiment on Wall Street was generally positive, some companies were left out of the rally. Toll Brothers, Inc. (NYSE: TOL), e.l.f. Beauty, Inc. (NYSE: ELF), and Momo Inc. (NASDAQ: MOMO) were among the worst performers today. Let's look more closely at these stocks and why they did so poorly.

Not "home sweet home"?

Toll Brothers fell 3% after reporting mixed financial results. The luxury homebuilder said that home sales grew 18% from the previous year's period, narrowly missing investors' expectations. The number of homes sold increased by 26% compared to the same period last year. Even though overall net income increased 41%, and the company's earnings were better than expected, investors seemed to focus on the decline in the average selling price per home, which fell more than 6%. Toll Brothers' high-end homes can cost upward of $2 million, so this indicates a decline in the sale of higher-priced units. Additionally, a floor joist recall by a major lumber manufacturer delayed the delivery of 150 homes to buyers.

Is e.l.f.'s beauty fading?

Shares of e.l.f. Beauty fell more than 16% after weak results from competitor Coty Inc. suggested a potential slowdown in demand for cosmetics and beauty products. Another potential contributor to the pain was an analyst report that cast doubt on the near-term future for purveyors of beauty products. In a research note to clients, Jefferies' analyst Andy Barish pointed to weak spending from Hispanic consumers, potentially resulting from uncertain U.S. immigration policy, and revealed that an estimated 24% of e.l.f. Beauty's customers are Hispanic. Investors might be overreacting, as the note went on say that this might represent a longer-term opportunity for increased sales later in the year. It should be noted that with a market cap of less than $1 billion, this stock can be more volatile than its larger contemporaries.

Investors snub Momo

Finally, shares of Chinese social networking platform Momo fell 20% after the company reported financial results above the high end of investors' expectations. Revenue for the quarter increased 215% year over year to $312.2 million, while earnings per share of $0.29 nearly quadrupled from the $0.08 per share in the prior-year period. So why the fall? Momo had been beating estimates by 38% or more over the last four quarters, so investors might have let their expectations get too high. The stock had been up more than 150% over the last year going into its earnings report, so merely coming in at the high end of expectations didn't seem to be enough.

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Danny Vena has no position in any of the stocks mentioned. The Motley Fool recommends e.l.f. Beauty, Inc. and Momo. The Motley Fool has a disclosure policy.