The past two weeks have been brutal for most investors that are long the market. More than 1,600 stocks on the three major U.S. stock exchanges hit new 52-week lows last week, a sharp contrast to the mere 271 names reaching fresh highs.
SeaWorld Entertainment (NYSE:SEAS), Tilray (NASDAQ:TLRY), and Shake Shack (NYSE:SHAK) saw their stocks crater to their lowest levels in more than a year this past week. Let's take a closer look at how the three one-time high-flying stocks have fallen out of favor.
Image source: SeaWorld Entertainment.
SeaWorld Entertainment
In a span of just 13 trading days, we've seen SeaWorld stock go from hitting a six-year high of $36.96 to a new 52-week low of $20.05 on Friday. The market's getting rocked, but a 46% drop from peak to trough in less than three weeks is still pretty wild for a theme park operator that actually put out better-than-expected results during that swift downturn.
Revenue rose 6% in its latest quarter, and the increase in attendance was enough to push the turnstile clicks positive for all of 2019. Despite having three different CEOs as 2019 played out, operations have improved to the point where adjusted EBITDA soared 30% in the fourth quarter.
The problem is that investor sentiment for consumer-facing businesses that draw a lot of people to the same place at the same time -- and entertaining 22.6 million across all of SeaWorld's gated attractions scratches that itch -- is souring, with confirmed coronavirus cases in this country mounting. New CEO Serge Rivera did say during SeaWorld's earnings call less than two weeks ago that he has seen "no discernible impact" on its crowd levels as a result of the deadly virus outbreak, but that now seems like a dated perspective, with the market's overall mood souring quickly since then.
Tilray
Tilray hit an all-time low of $10 on Friday, and while it may seem like nothing more than another broken IPO after going public at $17 less than two years ago, this was a stock that traded as high as $300 in the summer of 2018, when marijuana stocks were all the rage. We're talking about a nearly 97% plunge from peak levels for the Canadian cannabis cultivator, and at least one Wall Street bear doesn't think we'll hit bottom until Tilray literally hits rock bottom.
GLJ Research analyst Gordon Johnson slashed his firm's price target from $5 to $0 -- yes, zero -- on Wednesday. He thinks an asset writedown and a sequential revenue dip in its latest quarter bode poorly for Tilray's near-term outlook. It had posted a sequential decline in hemp product sales the quarter before that. Inventory valuation adjustments and a recent debt issuance aren't helping.
Shake Shack
There was a time when Shake Shack was a market darling among eatery stocks, but folks aren't coming around the way they used to for its frozen custard and signature burgers. Comps slipped 3.6% in the disappointing fourth quarter that it posted two weeks ago. The blame is falling on Shake Shack's rapid expansion and the cannibalization taking place as a result of opening new locations near existing restaurants.
Revenue did increase 22% for Shake Shack as a result of the new openings, but contracting margins and weaker-than-expected guidance for 2020 are problematic. Investing in restaurant stocks is easy when comps are positive and reality is exceeding expectations, but Shake Shack is falling short on both fronts.
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March 08, 2020 at 11:00PM
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