Hot Stocks: China stocks drop; MRVL hits high; SWBI, OLLI plunge; HGTY rises in post-SPAC debut
- While momentum, Omicron and the Federal Reserve generated overall trading on Friday, quarterly results remained a crucial catalyst for individual stock moves.
- Look at Marvell Technology (NASDAQ:MRVL) as a key example. The semiconductor company captured the seemingly insatiable demand for computer chips in its latest quarter, releasing stronger-than-projected results and rallying to a fresh 52-week high.
- However, Smith & Wesson Brands (NASDAQ:SWBI) and Ollie's Bargain Outlet Holdings (NASDAQ:OLLI) moved the other direction on their respective earnings releases. Both stocks suffered substantial declines, with OLLI plunging to a new 52-week low.
- Outside of earnings, worries about China re-emerged. News that DiDi would delist from the U.S. after a long struggle with regulators dragged down other high-profile U.S.-listed Chinese names. The decliners included Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU), Weibo (NASDAQ:WB), NetEase (NASDAQ:NTES) and JD.com (NASDAQ:JD).
- Elsewhere, Hagerty (NYSE:HGTY) received a warm welcome to the Wall Street community. The stock rose in its first day as a public company following a SPAC deal.
Sector In Focus
- The decision by ride-hailing service DiDi to delist its shares from the U.S. triggered an overall selling spree among U.S.-listed Chinese companies. The sector was dragged down by fears that a wave of future delistings could follow, amid the stepped-up regulatory climate in China.
- Alibaba (BABA) represented one of the standout losers in the sector. The stock fell 8% to reach a fresh intraday 52-week low of $108.70. This slide added to the weakness BABA has seen throughout the year. The stock is down more than 50% in 2021.
- Baidu (BIDU) and JD.com (JD) also dropped by nearly 8% on the day. NetEase (NTES) retreated about 7%, while Weibo (WB) fell 6%.
- Hagerty (HGTY) raced out of the starting gate in its Wall Street debut. The provider of insurance for classic and enthusiast vehicles climbed 21% on its first day as a public company.
- HGTY completed a SPAC deal with Aldel Financial, giving the company a valuation of over $3B. The transaction came with a $704M PIPE, which included investors like State Farm and Markel.
- HGTY climbed $2.67 on the day to close at $15.62.
- Smith & Wesson Brands (SWBI) reported a quarterly profit that rose from last year but failed to meet analysts' expectations. Meanwhile, revenue slipped more than 7% as demand sagged from pandemic-inflated levels.
- In response to the earnings miss, Cowen lowered its rating on the firearm and ammunition maker. The firm now views SWBI as a Market Perform, compared to its previous rating of Outperform. Analyst Cai Von Rumohr cited a tougher pricing environment for the downgrade.
- Hurt by the earnings news, SWBI plunged nearly 29% on Friday to close at $16.33. The stock remains off a 52-week low of $14.50 set earlier in the year.
Notable New High
- The release of strong quarterly results sparked an 18% rally in Marvell Technology (MRVL). Thanks to the earnings beat, shares of the semiconductor producer reached a new 52-week high.
- MRVL reported a quarterly non-GAAP profit of $0.43 per share, up from $0.34 per share last year. Analysts had expected a figure of $0.38 per share. Earnings were lifted by 61% revenue growth, with the top line totaling $1.21B for Q3.
- Looking ahead, the company predicted Q4 EPS of $0.45-$0.51, with revenue of about $1.32B, plus or minus 3%.
- MRVL finished Friday's trading at $83.59. This represented a gain of $12.56 on the day. Early in the day, shares also reached an intraday 52-week high of $88.49.
- Friday's gains accelerated an uptrend that has lasted since mid-May. The stock is now up nearly 92% since the same time last year.
Notable New Low
- Ollie's Bargain Outlet Holdings (OLLI) plunged 20% after the company issued a disappointing earnings report. The sell-off took the stock to a new 52-week low.
- The chain of discount retail stores reported quarterly results that missed expectations by more than 25%. Revenue dropped 7.5% to a level below $384M, hurt by continued supply chain bottlenecks.
- This sales slump included a 15.5% decline in comparable-store sales, a drop-off that more than reversed the 15.3% advance seen in the previous year. Comparable sales were also below pre-pandemic levels, sitting 1.3% below levels seen in Q3 2019.
- Along with the weak results, OLLI issued a disappointing forecast. The company projected total sales for the full year of $1.762B-$1.772B, below the $1.83B predicted by analysts.
- OLLI declined $12.87 on Friday to close at $49.99. Shares also established an intraday 52-week low of $49.03 earlier in the session.
- The stock reached a 52-week high of $123.52 early in the year but lost substantial ground with a steady decline that lasted from mid-August into October. Friday's slide took the stock below a recent trading range. Shares are now down about 39% since the end of 2020.
- To track more of the day's best- and worst-performing stocks, turn to SA's On The Move section.