Hot Stocks: Online retailers plunge; SFM, DOCN drop on earnings; K sets high; ICPT jumps

Stocks plunged on Thursday, with the Nasdaq falling 5% and recording its biggest single-day percentage decline since mid-2020. Worries about interest rates and the economy contributed to the sell-off.

Online retailers were among the leaders of the decline. Earnings reports from several industry players raised concerns about consumer spending. Amazon (AMZN), Shopify (SHOP), Carvana (CVNA), Farfetch (FTCH) and Chewy (CHWY) were among the high-profile names to suffer significant drops.

Sprouts Farmers Market (SFM) represented another standout decliner on the session. Shares lost nearly a quarter of their value on disappointing quarterly results.

Earnings news also weighed on DigitalOcean (DOCN), which plunged to a new 52-week low.

Even on a dreamy day for the overall markets, some stocks managed to post notable gains. Intercept Pharma (ICPT) rose on a licensing deal, while Kellogg (NYSE:K) rode a strong earnings performance to a fresh high.

Industry In Focus

A series of shaky earnings reports prompted a sector-wide sell-off in names related to online retail. With eBay, Etsy and Wayfair all falling in the wake of their quarterly reports, investors worried about the prospects for the consumer, given ongoing inflationary pressures and the dissipation of COVID-inspired demand.

Shopify (SHOP) also contributed to the retreat, dramatically missing expectations with its Q1 earnings figure. In response, the e-commerce platform dropped nearly 15% on the session.

In another troubling data point, Carvana (CVNA) fell almost 18%. Morgan Stanley cut its rating on online auto retailer, amid worries about the firm’s cost structure. The downgrade took Morgan Stanley’s investment recommendation to Equal-weight from Overweight.

Hurt by this parade of bad news for the sector, industry heavyweight Amazon (AMZN) dropped nearly 8%. Farfetch (FTCH) and Chewy (CHWY) both fell more than 10% as well.

Standout Gainer

Shares of Intercept Pharma (ICPT) surged on news that it has struck a deal to sell certain product rights to Europe-based Advanz Pharma (OTCPK:CXRXF). The stock jumped 21% on the news.

Under the deal, ICPT will sell a license to commercialize the firm’s Ocaliva product outside the US The drug is a therapy for primary biliary cholangitis, a chronic disease marked by the slow deterioration of the liver’s bile ducts.

The agreement calls for ICPT to receive an upfront payment of $405M. It could also get a $45M payment if Ocaliva hits a particular regulatory milestone.

ICPT jumped $3.40 to finish at $19.59. This was its highest close in more than a year.

Standout Loser

The release of financial figures sparked a mass investor exodus out of Sprouts Farmers Market (SFM). The stock dropped 24% on concerns that the grocery store chain won’t be able to raise prices fast enough to counteract inflation.

SFM reported Q1 results that missed analysts’ expectations on both the top and bottom line. The company also warned that its full-year results would likely be at the low end of its previous guidance range.

Dragged down by the earnings report, SFM ended Thursday at $23.75, plummet $7.60 on the session.

The stock reached a 52-week high of $35.34 in early April. Shares have been falling since, with Thursday’s drop adding to the retreat. SFM reached its lowest level since early November.

Notable New High

Given the broad selling on Thursday, new 52-week highs were rare on Wall Street. That said, Kellogg (K) represented one of a handful of stocks that reached new peaks, propelled by the release of strong quarterly earnings.

The packaged food maker easily beat projections with its quarterly profit, as revenue climbed nearly 3% from last year to reach $3.67B. This came as the company was able to raise prices to counteract inflationary cost pressures.

Looking ahead, the company raised its forecast for organic sales growth, saying it now expected to increase the figure by about 4%. Previously it had targeted a growth rate of 3%.

Boosted by the earnings news, K rose 3.5% to finish trading at $70.23. The stock also reached an intraday 52-week high of $71.05.

After choppy trading over much of the past year, the stock has climbed sharply since mid-March, when it reached a 52-week low of $59.54. Shares have advanced 18% since that low.

Notable New Low

The release of disappointing earnings sparked a massive selling spree in shares of DigitalOcean (DOCN), sending the stock to a new 52-week low. With the ongoing conflict in Ukraine cutting into the firm’s results, the stock dropped 18% on the day.

The cloud infrastructure company revealed a Q1 profit that came in well below the amount predicted by analysts, despite revenue that rose 36% from last year. DOCN also gave a soft forecast for Q2, with the Ukraine war lowering its quarterly revenue by about $3M.

DOCN dropped $7.90 to close at $35.66. During the session, the stock also reached an intraday 52-week low of $34.25.

Shares rallied to a 52-week high of $133.40 in November but have seen intermittent selling pressure since. DOCN has dropped about 73% since that peak.

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

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