Wall Street capped a strong week with a great session on Friday, as major indexes once again posted gains of 1% to 2%. Although news that the U.S. economy created just 75,000 new jobs in May might have seemed like a disappointment, investors nevertheless saw it as more ammunition supporting a Fed interest rate cut in the near future. Yet even with that supporting much of the market, some companies had bad news that sent their shares lower. DocuSign (NASDAQ: DOCU), Guess? (NYSE: GES), and American Equity Investment Life (NYSE: AEL) were among the worst performers. Here's why they did so poorly.
DocuSign disappoints despite strong sales growth
Shares of DocuSign dropped 12% following the electronic signature specialist's first-quarter financial report. DocuSign said that revenue rose 37% compared to the prior-year period, with similar-sized gains in recurring subscription revenue. Adjusted earnings also moved significantly higher, but investors seemed to focus on the slower 27% rate of billings growth for the period. CEO Dan Springer didn't seem alarmed by the news, instead noting that its DocuSign Agreement Cloud product suite should be able to help it "deliver a much broader set of solutions to market, positioning us as the next 'must-have' cloud." Shareholders appear to need convincing, so it'll be interesting to see how the company performs heading into the second half of 2019.
Image source: DocuSign.
Guess? makes a dividend cut
Jeans maker Guess? saw its stock fall 8% after the company announced its latest financial results and cut its dividend. Adjusted losses for the first quarter of the company's 2020 fiscal year widened by 10% from year-earlier levels, outweighing modest revenue growth of 3%. Guess? saw substantial headwinds from currency impacts, but what concerned investors the most was the clothing specialist's decision to cut its dividend in half to $0.1125 per share quarterly. The company said that it wants to redeploy capital and use more stock buybacks for returning money to shareholders. Yet even with a new yield of 2.8%, dividend investors weren't happy to see their payouts slashed during a tough time for the retailer.
American Equity Investment gives up on a sale
Finally, shares of American Equity Investment Life lost 9%. The fixed annuity and life insurance specialist said that it had chosen to stop discussing a possible sale after having sought out and failed to find interested buyers that were willing to pay what it thought it was worth. Instead, CEO John Matovina said that he believes that "significant growth opportunities exist for American Equity as a stand-alone company because of well-known demographic trends." The announcement ended a year of speculation about a possible transaction, and shareholders don't seem as optimistic as American Equity does about exactly what its future will look like.
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