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Why Sprint, Ferro, and 3D Systems Slumped Today

Image source: 3D Systems.

A flood of new record highs has hit the stock market, and Monday continued the streak for the Dow while sending the S&P 500 to a new high-water mark as well. Solid earnings results from the financial sector lifted the market once again, and investors also focused on merger and acquisition activity in moving some key players higher. Yet the gains in broad market measures were small, at a quarter-percent or less, and many stocks missed out on the record run. Among the weakest performers on Monday were Sprint (NYSE: S), Ferro (NYSE: FOE), and 3D Systems (NYSE: DDD).

Sprint gets left behind

Sprint fell 5% as investors tried to interpret the decision by its majority owner, Japanese conglomerate SoftBank, to buy chipmaker ARM Holdings. Many investors believe the move suggests SoftBank CEO Masayoshi Son isn't terribly interested in trying to squeeze more value from the conglomerate's holdings in Sprint, and that could bode ill for the carrier in its ongoing fight to hold its own against its peers. Competition in the U.S. wireless industry has grown fierce, and the threat of price wars could hurt Sprint more than it would stronger carriers with larger dedicated user bases. Today's downward move might prove unwarranted if SoftBank remains committed to the wireless company, but investors want to see proof of that from Sprint before they get excited about the stock.

Ferro disappoints as buyout hopes fade

Ferro dropped 11% after reports late Friday indicated that the specialty chemicals company had chosen not to proceed after receiving buyout bids from private equity companies. The reports identified Apollo Global Management and CVC Capital Partners as potential acquirers, but they indicated that the bids were below where the stock had been trading last week. The industry has been under some pressure lately because of a flood of consolidation among major players and the focus on higher-value niches within the broader specialty chemicals business. Activist investors have pushed Ferro to pursue a sale, but it's unclear whether today's price drop will be sufficient to spur Ferro to reverse course and take action to pursue negotiations with would-be private equity buyers.

3D Systems falls flat

Finally, 3D Systems declined 8%. The company was just one of the 3-D printing specialists that received negative comments from analysts at Piper Jaffray today, with the analyst company cutting its rating on the stock to underperform. A look at sales volume within the 3-D printing industry showed that product demand has fallen substantially, and one prime culprit is likely HP, which chose to enter the market to sell 3-D printers. The well-known name will pose a threat to smaller players like 3D Systems, which counted on its first-mover advantage to lay the foundation to participate in the long-term growth of the industry. With those efforts having been tenuous at best, 3D Systems will have to fight hard to reestablish itself and overcome competitive pressure that could eventually jeopardize its entire future.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.