Week's Winners and Losers: IPO Scores; SanDisk Snores
Netflix (NFLX) -- Winner
Shares of the leading premium digital video service hit all-time highs this week after posting another blowout quarter. Netflix closed out the the first quarter with 4.9 million more streaming subscribers than it had when the year began, topping its earlier forecast for both international and domestic growth.
Currency fluctuations, the costs of ramping up in new overseas markets, and the gradual slide of its DVD rentals business held profitability back, but Netflix still found a way to beat Wall Street's earnings estimates. The premium streaming video market is starting to get more competitive, but Netflix isn't having any problems attracting and retaining customers.
Arrowhead Research (ARWR) -- Loser
Sometimes it's Wall Street that misses the big picture. Arrowhead Research slipped after being downgraded by Jefferies (JEF). Stocks get downgraded all of the time, but this one's notable since the price target on Arrowhead is being shaved to $9 from $30.
That's a pretty big move, but the only mystery is why this $30 price target stuck around so long in the first place. Shares of Arrowhead have been trading in the single digits since September.
It was a good week to go public. Two of the more anticipated consumer-facing companies to hit the market this week were Party City (PRTY) and Etsy (ETSY).
Party City is a chain of more than 900 specialty retail party supply stores. It's a highly seasonal business, as you can imagine. The stores get mobbed in October as folks snap up Halloween costumes. The IPO itself was more treat than trick for investors. It priced at $17, closing 22 percent higher on its first day on the market. Arts and crafts marketplace Etsy fared even better. Underwriters priced the stock at $16 on Wednesday night, and it went on to nearly double when it closed Thursday at $30.
The two strong debuts come as welcome news to the many companies in the pipeline to go public later this year. Investor appetite is healthy, and it should remain that way unless there's a sharp market correction.
SanDisk (SNDK) -- Loser
SanDisk may be the undisputed champ of flash memory chips and products, but it's hoping that investors don't have a long memory. The stock took a hit after SanDisk posted disappointing quarterly results. It missed Wall Street's profit target for the first time in more than a year, and its forecast paints a gloomy picture for its near-term performance.
SanDisk is also slightly trimming its headcount, a problematic indicator that things aren't likely to turn up anytime soon. At least four analysts downgraded the stock on the ho-hum report and troublesome outlook. Wall Street pros have a long memory.
Yahoo (YHOO) -- Winner
Yahoo and Microsoft (MSFT) have adjusted a long-running partnership that will no longer find Yahoo relying solely on Microsoft's Bing to serve up all of its search and paid search results. Microsoft will continue to handle a majority of Yahoo's desktop search business, but now Yahoo will have broader flexibility to promote its own search solutions particularly in mobile where the real growth is taking place.
Yahoo signed the original deal with Bing in 2009 when it was desperate, but it's in a better place now. It has cashed in on valuable Asian assets, and it now has an aggressive CEO who's willing to think outside of the box. The Microsoft deal was holding it back, even if it helped provide a steady trickle of revenue. If Yahoo wants to be a major player in search -- and resume growth in its meandering display advertising business -- taking control of its namesake platform is a move that's long overdue.
Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix and Yahoo. The Motley Fool owns shares of Netflix and Yahoo. Try any of our Foolish newsletter services free for 30 days. Looking for a winner for your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.