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Why Micron Technology, American Outdoor Brands, and Cara Therapeutics Slumped Today

Stocks finished Friday on a mixed note, putting a quiet end to a volatile week for investors. The Dow and S&P 500 posted modest gains, but the Nasdaq Composite fell slightly after some of the tech-heavy benchmark's key components suffered losses. Markets wrapped up the first half of 2017 with considerable gains, but some individual companies suffered bad news that sent their shares lower on the last day of the second quarter. Micron Technology (NASDAQ: MU), American Outdoor Brands (NASDAQ: AOBC), and Cara Therapeutics (NASDAQ: CARA) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Micron gets chipped

Shares of Micron Technology dropped 5% after the company announced fiscal third-quarter results late Thursday. The memory chipmaker's report was actually quite favorable, as Micron had record revenue that nearly doubled from the year-ago quarter, supported by a 14% rise in prices on its DRAM chips and a 17% increase in sales volume on NAND flash chip sales. CEO Sanjay Mehrotra said that the results "reflect solid execution of our cost reduction plans and ongoing favorable industry supply and demand dynamics," and Micron predicted continued strength in the fiscal fourth quarter as well. Yet some investors seemed uncomfortable that Micron stock had already risen by about 150% in just the past 12 months, and the slight slide suggested that at least some shareholders decided to claim their just rewards from their positions in the heavily cyclical memory chip maker.

Image source: Micron Technology.

American Outdoor Brands sees a battle ahead

American Outdoor Brands stock declined more than 7% in the wake of the company's fiscal fourth-quarter earnings report. The maker of Smith & Wesson firearms did better than most had expected, with solid performance on both the top and the bottom lines. What got American Outdoor Brands into trouble was its forecast for future results, which included calls for fiscal 2018 revenue figures to decline between 12% and 17% and for adjusted earnings per share to be down as much as 45% from where they finished fiscal 2017. Many have feared a pullback for gun demand following the election of President Donald Trump, because fear of tighter federal gun control measures evaporated under a Republican-controlled Congress and White House. However, what's good news for gun owners could be bad news for American Outdoor Brands, and the gun maker will have to work hard to sustain gun sales and build up new sources of revenue going forward.

Cara disappoints investors

Finally, shares of Cara Therapeutics fell 40% after the company released discouraging clinical trial results. The phase 2b trial of chronic-pain candidate treatment CR845 in oral form found that hip and knee patients on the two lower-dose tablet strengths showed no significant reductions in joint pain scores compared to a placebo. Only the high-dose formulation had statistically significant effectiveness, but that was limited to cases involving patients suffering from hip pain. Cara has other avenues for potential approval from the U.S. Food and Drug Administration, including a planned study for patients suffering from chronic itching, such as those with end-stage kidney disease. The plunge wiped out a big rise in Cara shares in recent days, and investors will now have to wait to see exactly how the company decides to move ahead with further studies.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.