MSGN - Why Cree MSG Networks and Children's Place Slumped Today
Wall Street had a minor celebration on Wednesday as investors reacted positively to good news from key retailers in the department store and home improvement areas. Signs that the consumer economy in the U.S. remains strong were encouraging, especially as market participants wait to see how much the Federal Reserve might try to help bolster economic expansion. Yet some stocks missed out on the rally. Cree (NASDAQ: CREE), MSG Networks (NYSE: MSGN), and Children's Place (NASDAQ: PLCE) were among the worst performers. Here's why they did so poorly.
Shares of Cree fell 16% after the maker of LEDs and other electronics components gave a somewhat disappointing outlook in its fiscal fourth-quarter financial report. Fundamentally, the company managed to outpace what most people had expected to see, but sales declines of 5% stemmed largely from a 25% drop in revenue from its LED segment. Earnings were also down from year-ago levels. More discouraging was Cree's outlook, in which it said that trade-related pressures on major customer Huawei and weak LED demand would persist into the current quarter. Although long-term investors are used to the cyclical nature of Cree's business, it's still tough to see the company suffer a lengthy slowdown.
Image source: Cree.