Hot Stocks: Fintech plunges; U, WEN fall on earnings; ELY rallies; SWCH jumps to new high

May 11, 2022 5:47 PM ETRobinhood Markets, Inc. (HOOD), SQU, WEN, ELY, SWCH, DBRGBy: Brian Stewart, SA News Editor2 Comments

Trading Charts on a Display

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A hotter-than-expected reading on inflation and intense selling in the cryptocurrency market led to another day of losses on Wall Street. The Nasdaq led the retreat on Wednesday, falling by 3%, while the S&P 500 once again closed below 4,000.

The crash in the crypto market prompted an investor exodus from many high-profile fintech names. Weak results from Coinbase contributed to the slide, with double-digit percentage declines posted by Robinhood (NASDAQ:HOOD) and Block (NYSE:SQ).

Elsewhere, Unity Software (U) and Wendy's (WEN) were dragged lower by weak quarterly updates, with both reaching new 52-week lows.

Meanwhile, earnings news sparked gains in Callaway Golf (ELY). At the same time, a takeover deal sent Switch (SWCH) to a fresh high.

Sector In Focus

The ongoing deterioration in the cryptocurrency market fanned out across the fintech space. Sharp drops in crypto, as well as disappointing results from Coinbase, triggered selling in many of the sector's biggest names.

The slide occurred as Bitcoin (BTC-USD) dropped another 8%, falling below 29K.

That represented a relatively mild decline within the asset class. The unwinding of algorithmic stablecoin TerraUSD (UST-USD) caused Terra (LUNA-USD) to crash 96%. Meanwhile, cardano (ADA-USD) fell 21% and solana (SOL-USD) declined 33%.

This carried over to the fintech space. COIN plunged 26% following its quarterly results. At the same time, Robinhood (HOOD) dropped 12% and Block (SQ) suffered a 16% decline.

Standout Gainer

Callaway Golf (ELY) received a boost from the release of quarterly results. Shares climbed about 10% as it exceeded expectations with both its earnings and revenue totals.

Helped by its TopGolf golf driving game, the golf equipment maker breezed by expectations, topping analysts' consensus by 50%. Revenue jumped about 60% to $1.04B.

ELY also raised its forecast for 2022. It now targets adjusted EBITDA of $535M-$555M and revenue of $3.935B-$3.970B.

Bolstered by the earnings news, ELY posted a gain of $1.84, closing the day at $19.80. With the advance, the stock has bounced off a 52-week low of $17.78.

Standout Loser

Unity Software (U) dropped 37% following the release of its quarterly update, which showed an uninspiring performance in Q1 and guidance that indicated that slower growth was on the way for the video game software development company.

The firm reported a loss for its latest quarter, matching expectations. Revenue jumped 36% from last year, but the total of $320M failed to top analysts' consensus.

Meanwhile, the firm's revenue projection for Q2 came up well short of forecasts. U predicted a figure between $290M and $295M, compared to the nearly $360M that analysts were targeting.

For the full year, the firm's outlook called for revenue growth between 22% and 28%, below what Wall Street experts had hoped and well below the top-line expansion U saw in Q1.

Weighed down by the results, U ended the session at $30.30, a decline of $17.73 on the day. Shares reached an intraday 52-week low of $29.30.

The stock established a 52-week high of $210 in November but has seen selling pressure since. U has given up almost 86% of its value since its peak.

Notable New High

Data-center operator Switch (SWCH) received significant buying interest, rallying 9% after agreeing to be purchased by DigitalBridge (DBRG) in a deal valued at about $11B.

Under the deal, SWCH shareholders will receive $34.25 per share from DBRG and Australian infrastructure manager IFM Investors. The transaction is projected to close in the second half of the year.

SWCH reached an intraday 52-week high of $33.84, before eventually ending the session at $33.54. This marked an advance of $2.79 on the session.

Wednesday's rally added to gains posted since late January. SWCH has climbed about 42% over that period.

Notable New Low

Disappointing earnings spurred selling in shares of Wendy's (WEN), with the fast-food giant dropping 11% on the day. With the decline, the stock reached a new 52-week low.

The company came up short of expectations on both the top and bottom lines. The weak results came amid slower sales growth and shrinking margins.

Specifically, the firm pointed to "higher commodity and labor costs, customer count declines, and the impact of the company's investments to support the entry into the United Kingdom market."

WEN dropped $2.03 to finish trading at $16.07. During the session, shares also reached an intraday 52-week low of $15.76.

This added to a downturn that began in late March. The stock has plunged 40% since that time.

For more of the day's best- and worst-performing stocks, click over to Seeking Alpha's On The Move section.

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