The stock market posted a huge gain on Tuesday, buoyed by hopes for a Fed rate cut, as well as comments from the White House suggesting that the U.S. might have better chances to secure a favorable trade deal with China than previously expected. Most major benchmarks jumped 1% or more. However, a few stocks missed out on the rally, and Blue Apron Holdings (APRN), Biohaven Pharmaceutical Holding (BHVN), and GCP Applied Technologies (GCP) were among the worst performers. Here's why they did so poorly.
Blue Apron sees a reversal
Shares of Blue Apron Holdings fell 13%, wiping out gains that the meal-kit subscription service provider saw on Monday. Blue Apron's stock price had fallen below the $1-per-share level, and so the company institute a 1-for-15 reverse stock split that took effect at the beginning of this week. However, the fundamental challenges that Blue Apron faces still remain. A few companies have managed to bounce back from reverse stock splits and have fully recovered, but all too often, the difficulties that caused stocks to need a reverse split in the first place keep plaguing those companies and cause further losses -- as Blue Apron is seeing today.
Image source: Blue Apron.
Biohaven looks to raise cash
Biohaven Pharmaceutical Holding saw its stock plunge almost 24% after the clinical-stage biopharmaceutical company announced that it would look to raise $300 million in a secondary offering of stock. As often happens in the healthcare space, Biohaven timed its decision to follow a big jump in its share price, which came after reports in April that the biopharma company might be looking for a potential acquirer or seeking some other kind of strategic partnership. Today's decline might make it seem like now's a bad time to raise cash, but the share price is still up almost 20% from where it started the year, and the potential success of Biohaven's migraine treatment rimegepant makes the stock a promising choice for investors.
GCP stops its strategic review
Finally, shares of GCP Applied Technologies finished lower by 13%. The construction products technology specialist said that it had concluded its strategic review process without finding a potential transaction that would, in its words, "provide adequate value to our shareholders." For now, therefore, GCP intends to remain a stand-alone company and execute a strategic plan that's appropriate for that independent status. The stock had been up as much as 20% in 2019 following initial reports of the strategic review, but now, shares have fallen back to their lowest levels since 2016 on fears that GCP might be vulnerable to a slowing housing market.
