Hot Stocks: DOCU weighs on SaaS sector; DIDI crashes; PSO takeover offer; TLYS plunges

Worries that a drawn-out conflict in Ukraine would significantly dent the global economy led to another day of selling on Friday. The major averages slumped again, led by a 2.2% drop in the Nasdaq. The S&P 500 fell 1.3% and once again came within striking distance of 4,200.

Software-as-a-service stocks were among the decliners on the session. Along with general concerns about tech valuations, a disappointing forecast from DocuSign (NASDAQ: DOCU) spurred the group lower. Coupa Software (NASDAQ: COUP)Amplitude (NASDAQ: AMPL) and Twilio (NYSE: TWLO) also suffered declines.

Tilly’s (NYSE: TLYS) represented another of the day’s standout decliners. Shares lost nearly a quarter of their value amid earnings results and weak sales guidance for the current quarter.

Investors also moved out of DiDi Global (NYSE: DIDI), which lost more than 40% of its value on ongoing listing concerns. The stock, which came to market last year amid high expectations, reached another post-IPO low, closing below $ 2.

Looking at some of the day’s notable gainers, Pearson (NYSE: PSO) got a boost from a takeover offer. Meanwhile, Amphastar Pharmaceuticals (NASDAQ: AMPH) rallied to a new 52-week high following the release of strong financial figures.

Sector In Focus

A massive earnings-related slide in DocuSign (DOCU) undermined confidence in the software-as-a-service industry, as investors continue to express growing skepticism about valuations in tech.

DOCU plunged 20% on the session after it gave a revenue forecast that suggested a substantial slow-down in growth compared to the previous year. The firm’s outlook for fiscal 2023 implied top-line expansion of 18%, compared to 45% in the prior year.

Fears of a slowdown hit the overall industry. Coupa Software (COUP) and Amplitude (AMPL) both retreated about 10%. Meanwhile, Twilio (TWLO) fell nearly 6%.

Standout Gainer

Shares of education company Pearson (PSO) popped after receiving takeover interest, sending the stock higher by nearly 18%.

The stock initially jumped amid reports that Apollo (NYSE: APO) was considering an offer for the company. Later, PSO revealed that it had rejected an $ 8.5B offer.

While APO’s first approach dates back at least until November, PSO said the latest bid came early this week, priced at 854.2 pence a share, the equivalent of $ 11.16. PSO’s board said the offer was unanimously rejected as significantly undervaluing the firm.

PSO gained $ 1.54 on Friday to close at $ 10.23. With the advance, the stock jumped above recent resistance to record its highest close since last September.

Standout Loser

Tilly’s (TLYS) suffered a mass investor exodus after releasing a quarterly profit that missed expectations and predicting a sharp comparable sales decline for the current quarter. The stock dropped 24% during the session.

The apparel retailer reported a Q4 profit that came in short of analysts’ expectations, despite revenues that jumped nearly 15% from last year.

Looking ahead, the company predicted that its Q1 comparable-store sales would drop between 10% and 13% compared to last year. TLYS blamed the slide on a tough comparison to last year, when government stimulus boosted consumer activity.

With the earnings-inspired sell-off, TLYS ended the day at $ 9.30, a decline of $ 2.95 on the session. Shares also established a fresh intraday 52-week low of $ 9.

Shares fell sharply in January but attempted to stabilize during February. However, selling pressure returned late last week, accelerated by Friday’s slide. TLYS has dropped more than 40% since early January.

Notable New High

Earnings news sparked a nearly 13% rally in Amphastar Pharmaceuticals (AMPH), as better-than-expected results sent the stock to a new 52-week high.

The generic drug maker posted a GAAP profit for its latest quarter, reversing a loss recorded in the same period last year. On an adjusted basis, the company’s profit rose from last year and topped expectations.

Revenues rose 26% to reach almost $ 121M. The company benefited from a surge in sales for Epinephrine, used for the treatment of allergic reactions. The top-line figure for the drug jumped more than 150% from last year.

AMPH gained $ 3.83 to finish the session at $ 34.30. During the day, the stock reached an intraday 52-week high of $ 34.96.

Friday’s rally accelerated an advance that has marked trading since late October. AMPH has climbed almost 86% over the last six months.

Notable New Low

DiDi Global (DIDI) cratered 44% after the firm delayed plans to list its shares in Hong Kong. The ongoing regulatory wrangling, which has driven the stock lower since shortly after it came public in the US last year, sent shares to a fresh 52-week low.

The China-based ride-hailing service received word from the Cyberspace Administration of China that the company would not be allowed to list on the Hong Kong exchange. Regulators blamed inadequate provisions on behalf of DIDI to avoid security and data leaks.

DIDI, which came public last June at a price of $ 14 per share, finished Friday’s trading at $ 1.89, a decline of $ 1.49 on the session. Shares reached an intraday 52-week low of $ 1.71 earlier in the day.

The stock, which once reached a 52-week high of $ 18.01, is now about 87% below its IPO price.

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