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Why Square, Glu Mobile, and NetApp Slumped Today

Dan Caplinger, The Motley Fool

Wall Street closed the week on a negative note, as major stock indexes once again suffered losses. Between trade and tariff issues, monetary policy, and ordinary economic conditions, investors feel increasingly nervous about whether the future can be even close to as good as the past several years have been. Earnings season has also exposed some problem areas, and unimpressive reports from some companies led to dramatic share-price declines. Square (NYSE: SQ), Glu Mobile (NASDAQ: GLUU), and NetApp (NASDAQ: NTAP) were among the worst performers. Here's why they did so poorly.

Square can't satisfy growth-hungry shareholders

Shares of Square dropped 14% even though the payment processing company saw solid growth in its second-quarter results. Revenue soared 44% from the year-earlier period, and adjusted pre-tax operating earnings were higher by an even stronger 54%. Square called out its Cash App mobile application for making peer-to-peer payments as contributing substantially to growth, and CEO Jack Dorsey believes that the company can serve both individuals and businesses with separate but important ecosystems. Yet even with expectations for 43% full-year revenue growth this year, Square investors wanted to see faster growth prospects than what they actually got.

Square logo of concentric black and white squares.

Image source: Square.

Glu takes a hit

Glu Mobile saw its stock plunge 36.5% following the mobile game maker's reduction in its guidance for the 2019 fiscal year. Second-quarter revenue at Glu Mobile was solid, rising 6%, and bookings of $101.9 million set a new record for the company. CEO Nick Earl pointed to the introduction of WWE Universe and Diner DASH Adventures as helping the company's overall results, and pipeline prospects for future games look promising. Yet Glu Mobile cut its full-year bookings guidance substantially, expecting just $406 million to $410 million compared to its previous range of $445 million to $455 million. CFO Eric Ludwig tried to reassure investors that the change was largely a timing issue, but shareholders weren't convinced and seemed to fear that additional problems could lie ahead.

NetApp gives a warning

Finally, shares of NetApp plummeted 20%. The hybrid cloud data services company gave preliminary results for its fiscal first quarter, and they weren't pretty. Revenue will likely come in between $1.22 billion and $1.23 billion, down 17% from year-ago levels. Adjusted earnings are now expected to be between $0.55 and $0.60 per share. That compares unfavorably with the previous forecast for $0.78 to $0.86 per share. Full-year fiscal 2020 revenue will probably fall 5% to 10%, defying earlier expectations of modest growth. Many had felt that NetApp had successfully turned itself around, but the latest news suggests more work could lie ahead before the cloud data specialist can declare victory.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Square. The Motley Fool has the following options: short September 2019 $70 puts on Square. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com