Why Blue Apron, Tribune Media, and Innovate Biopharmaceuticals Slumped Today
Major market indexes were mixed on Monday, as a largely positive start to corporate earnings season was overshadowed by controversial pro-Russia comments made by U.S. President Trump during the summit in Helsinki.
But several individual stocks badly trailed the broader market. Read on to learn why Blue Apron (NYSE: APRN), Tribune Media Company (NYSE: TRCO), and Innovate Biopharmaceuticals (NASDAQ: INNT) each fell.
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Blue Apron gives back its gains
Shares of Blue Apron fell as much as 9% early in the session, then settled to close down 3.9% as Amazon.com kicked off its annual Prime Day sale.
This might not seem like a big deal for Blue Apron at first glance, but investors in the meal-kit specialist are undoubtedly concerned about simultaneous sales designed to drive business to Amazon's Whole Foods Market subsidiary. As fellow Fool.com contributor Jeremy Bowman also pointed out this afternoon, Blue Apron's was one of the more severe declines among several grocery-centric stocks as shareholders worry Whole Foods' gains will come at the expense of their own.
It likely didn't help that Blue Apron stock rose 16% last week on speculation that it may be an acquisition target, which would mark the end of its short life as a publicly traded company following its IPO just over a year ago. Until Blue Apron offers some more concrete evidence of the underlying strength of its business — something we could see when it next announces quarterly results in a few weeks — I suspect shares will remain under pressure.
Tribune’s acquisition in doubt
Tribune Media stock plunged 16.7% in the wake of FCC chairman Ajit Pai stating he has "serious concerns" about Sinclair Broadcasting's (NASDAQ: SBGI) pending $3.9 billion acquisition of the television and digital media conglomerate. Sinclair shares also fell 11.7% on the news.
In particular, Pai is worried that Sinclair would still have control "in practice, even if not in name" of certain TV stations that were to be divested in order to secure regulatory approval for the transaction. Pai further suggested that, given a "potential element of misrepresentation or lack of candor" involved, this development could amount to "misconduct" by the two companies.
As such, Pai formed a draft order referring the deal to an administrative law judge, potentially opening the combination up to significant delays or regulatory denial.
Innovate’s massive stock offering
Finally, shares of Innovate Biopharmaceuticals plummeted 65.9% following the biotech specialist's disclosure of plans for an enormous dilutive stock offering and stock sale from existing shareholders.
The news didn't arrive in a press release from the company, but rather through an SEC filing that revealed Innovate will issue up to $175 million of new shares, while selling almost 14 million shares owned by existing stockholders. For perspective, Innovate's total float stood at just 13.7 million shares as of Friday's close, and its entire market capitalization was around $600 million.
To be fair, as a yet-to-be-profitable clinical-stage biotech company with cash and equivalents of just $13 million on its balance sheet last quarter — and as the best-performing biotech stock so far in 2018 at end of June — it's hard to blame Innovate for opportunistically raising cash now. But given the size of its offering relative to its market cap and float, it should be unsurprising to see the stock plummeting in response today.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AMZN. The Motley Fool has a disclosure policy.
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