Why Aphria, Spotify, and Lyft Slumped Today

Steve Symington, The Motley Fool - finance.yahoo.com Posted 5 years ago
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U.S. stocks gave back some of their recent gains on Monday as the first-quarter corporate earnings season kicked off in earnest. Both the Dow Jones Industrial Average and S&P 500 incurred modest losses of around 0.1%.

But some individual stocks fared even worse. Aphria (NYSE: APHA) withered after posting weak quarterly results, Spotify (NYSE: SPOT) skipped a beat following reports of a potential competitor entering its niche, and Lyft (NASDAQ: LYFT) dropped in the wake of recalling electric bicycles from three large markets.

Aphria's disappointing quarter

Shares of Aphria fell 14.9% after the Canadian cannabis company released weaker-than-expected fiscal third-quarter 2019 results. Revenue soared 617% year over year to 73.6 million Canadian dollars ($55.3 million), translating into a big net loss of CA$108.2 million ($81.3 million), or CA$0.43 per share ($0.32). 

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Image source: Getty Images.

Aphria's losses were amplified by big noncash impairment charges related to its acquisition of LATAM assets last September. Excluding those charges, its net loss would have been CA$50.2 million, or CA$0.20 per share. But that was still well below analysts' consensus prediction for earnings of CA$0.03 per share on revenue of CA$85.2 million. 

Aphria Chairman and interim CEO Irwin Simon noted the company is taking "decisive actions to increase efficiency," including investments in automation and packaging, as well as adjusting its production to new growing methods. But given Aphria's steep losses in the meantime, it's obvious the market isn't pleased.

Spotify faces more competition

Spotify stock fell 4.4% after Billboard reported Amazon.com (NASDAQ: AMZN) is gearing up to launch a free, ad-supported version of its streaming-music service.

Citing "sources familiar the plan," Billboard says Amazon's service could launch as early as next week, taking advantage of the tens of millions of its Echo smart speakers sold to help the free service proliferate. The move would mark a departure from Amazon's previous strategy of only offering two commercial-free music services: Prime Music as part of its Amazon Prime subscriptions, and Amazon Music Unlimited for a flat monthly fee.

If one thing is clear, it's that Amazon has an attractive pool of listeners to target. Spotify ended 2018 with a total of 207 million monthly active users, including 116 million users of its free tier. 

Lyft hits the brakes on bikes

Finally, shares of Lyft fell 6.3% after the recently public transportation network specialist recalled electric bicycles from its owned fleets in New York, Washington, and San Francisco following "a small number" of complaints over "stronger than expected braking force on the front wheel."

But some investors fear the problem may be bigger than Lyft is letting on; a separate New York Times report (may require subscription) says dozens of people have been injured using the bikes in recent months.

Lyft, for its part, is replacing the recalled bikes with motorless models in the meantime. But if these concerns continue to grow, it could throw a wrench in the company's expansion plans, which include investing $100 million to more than triple the size of its New York Citi Bike fleet alone to 40,000 bicycles by 2024.

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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 Amazon. The Motley Fool has a disclosure policy.