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With earnings season coming to a close, a number of once-loved momentum stocks have taken a beating. Some stumbled when earnings came in below analyst or company expectations. Others, perhaps more worrisome, are seeing endemic problems clip at their heels.In the office, we’ve been focused on these eight stocks and their epic tumble. (Red numbers denote declines from recent highs.)
Amazon (AMZN): Down 14% — The tech giant has ramped up production of its Kindle Fire heading into the holiday, which it sells at an estimated $50 loss, taking a bite out of net income. But what spooked investors most was the company’s own guidance for a possible loss during the fourth quarter as costs surge. Bottom line guidance has been weaker than consensus expectations over the past nine months, but some investors are holding out that Amazon will become one of only two real challengers to Apple in the tablet market.
DryShips (DRYS) Down 56% — DryShips has been plagued by interest rate swaps that have kept profitability at incredibly low levels. The company has become increasingly dependent on finding outside financing to continue operations as liabilities swell, diluting the share base.
First Solar (FSLR): Down 74% — Part of the attack on First Solar has stemmed from the rapidly complicating mess at Solyndra, a solar panel maker peer embroiled in a fraud case. But when the company’s CEO stepped down abruptly this October and earnings missed estimates by more than 35 cents, First Solar was hit with a slew of lower price targets and downgrades. Cheap Chinese imports of panels has also made it difficult for First Solar to stay competitive, putting pressure on margins.
Green Mountain (GMCR) Down 59% — Green Mountain was, for a long time, seen as the darling of the coffee industry. Starbucks was in the midst of a turn around and this little company in Vermont kept growing. That changed with David Einhorn, CEO of Greenlight Capital and the man who called Lehman’s demise, alleged fraud by the company in a presentation. After reporting earnings yesterday, top line results missed by $49 million, sending shares down 30%.
LinkedIn (LNKD) Down 38% — The social network has been an attractive play for investors hoping to get in on some sort of online network. Unfortunately, it’s not Facebook. Most of the company’s profits are built off of recruiting and business subscriptions, not advertisements.
Netflix (NFLX) Down 71% — Netflix has stumbled twice this year, and the ramifications of price increases and a failed name change has been massive. The company bled 800,000 U.S. subscribers when it announced third quarter earnings this October. Then it said it could fall into unprofitably as global launches and increased content costs hit its bottom line.
Research in Motion (RIMM) Down 74% — The creator of the smartphone has not been able to keep up with Apple or peers running Android. A service disruption last month that knocked out Blackberry Messenger service was a blow to the company’s core product. Research in Motion has claimed it could right the ship with a new operating system for its mobile phones and tablet, but constant delays have tried investor confidence.
Salesforce.com (CRM) Down 20% — Salesforce.com announced in its most recent earnings report that it could report a loss in 2012 on the back of high compensation costs and debt servicing. The company has excluded these from non-GAAP results, propping up statements, but that hasn’t alluded investors. Either way, margins of less 2% have made the company less palatable.
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