Investors sometimes complain about quarterly earnings. The argument is that the short-term focus on three-month periods forces publicly traded companies to lose their long-term focus. Decision-making is impaired as companies try to beat Wall Street estimates for each quarter instead of taking the long view. This can turn once-solid companies into stocks to sell over time.
In this market, the “short-termism” argument falls a bit flat. The likes of Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) have been rewarded by investors for investing in the near term to increase long-term profits.
Still, it’s true that investors can overreact to a single quarter. A modest earnings beat or a few million dollars in extra sale don’t always change the long-term investment case. At the same time, sometimes a quarter matters. Sometimes, performance over three months can change the story for years to come.
For these seven companies, recent earnings reports mattered — and that’s not good news. These aren’t necessarily the seven stocks that fell the most after earnings. But among mid-caps and large-caps, they’re the seven whose stories took the biggest hit and they’re the seven stocks to sell now. Each of these stocks fell sharply during earnings season, and each of these stocks may have a difficult time bouncing back any time soon.
Online postage provider Stamps.com (NASDAQ:STMP) hasn’t just seen its story change after earnings. Its story has broken.
For some time, short sellers had argued that STMP was due for a precipitous fall once its exclusive contract with the United States Postal Service was inevitably altered. They’ve been proven absolutely right. STMP lost its contract in February, news which sent the stock down by more than 50%.
Three months later, in its first quarter report, Stamps.com slashed full-year EPS guidance from $5.15 to $6.15 to