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Why Movado Group, Roku, and American Eagle Outfitters Slumped Today

Dan Caplinger, The Motley Fool

Wall Street had another summer celebration on Wednesday, as the S&P 500 and Nasdaq Composite once again set records. Most investors attributed the gains to a 4.2% rise in gross domestic product during the second quarter, which was slightly faster than the initial estimate on GDP had suggested last month. Yet even with a favorable attitude prevailing throughout most of the market, some stocks suffered setbacks. Movado Group (NYSE: MOV), Roku (NASDAQ: ROKU), and American Eagle Outfitters (NYSE: AEO) were among the worst performers on the day. Here's why they did so poorly.

Movado gets stopped

Shares of Movado Group fell 15% after the company released second-quarter financial results. Some aspects of Movado's Q2 seemed solid, including revenue gains of nearly 12% and an increase in full-year EPS guidance by roughly 4% to 6%. Yet with the stock having come into the report up more than 50% year to date, Movado's performance didn't seem to live up fully to the expectations of those who've been watching the watchmaker over the long run. Despite encouraging signs, the company will have to keep delivering in order to convince skeptical shareholders that its turnaround story is for real.

Back of silver-tone watch with blue outline, labelled Movado Sapphire Synergy.

Image source: Movado Group.

Roku faces competition

Roku stock dropped 5% following a report about a new potential competitor. The Information said that Amazon.com (NASDAQ: AMZN) could seek to release a free video app that would go directly against Roku's target audience, offering the chance to see already-aired content and collecting advertising revenue from partners. The Roku Channel has been highly successful, and so some see the Amazon threat as potentially disastrous for Roku. As advertisers continue to look for new ways to find space in an increasingly saturated market, many believe that streaming is the best frontier to pursue, and that could possibly leave room for both Amazon and Roku in the long run.

American Eagle falls out of fashion

Finally, American Eagle Outfitters finished off 6.5%. The young-adult retailer reported second-quarter results that included solid revenue gains of 14% on a 9% jump in comparable sales. But investors weren't happy with the retailer's guidance for the current quarter, with predictions for high-single-digit percentage comps increases and a mid-single-digit percentage rise in revenue signaling a potential slowdown in growth due in part to a calendar-related impact. American Eagle has rebounded sharply during 2018 after a multiyear slump, but some now seem to think the stock might have come too far, too quickly.

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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. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.