The stock market took a terrible tumble this morning, and it appears to be getting worse as the day gets longer. As of 10:40 a.m. EST, the Dow, Nasdaq, and S&P 500 are all down 3% or more, and tech stocks in particular are looking much worse for wear.
So far, shares of Alteryx (NYSE:AYX) are down 4.9%, Okta (NASDAQ:OKTA) is off 6.1%, Trade Desk (NASDAQ:TTD) stock fell 6.5%, and MongoDB (NASDAQ:MDB) 6.7%. On the plus side, all four of these stocks were down much more earlier in the day -- every one but Alteryx fell more than 10% in early trading, and Alteryx fell nearly 10%.
Coronavirus is of course the culprit. CNN is reporting that infections with the Chinese COVID-19 topped 79,000 globally over the weekend. With new outbreaks happening in South Korea, and even as far away as Iran and Italy, people are starting to use the "P" word to describe this phenomenon: pandemic.
"P" might also stand for panic, which is exactly what investors are doing right now. And in a panic situation like this one, some of the first stocks to be jettisoned from peoples' portfolios will be the ones with which investors fear they have the most to lose -- and with which they have the least assurance that there's something to be gained.
That's why you can see how Trade Desk, MongoDB, Okta, and Alteryx might all look especially vulnerable today. In each case, the stock in question has recorded astounding gains over the past year -- gains investors will be fearful of losing. Trade Desk and MongoDB stocks have both climbed 53% in the past 52 weeks, Okta's up 59%, and Alteryx 86%.
At least some investors selling today will be doing so in order to quickly capture "paper profits" on their stocks before any more have a chance to slip away due to other folks selling.
At the same time, the fact that neither Okta nor MongoDB is currently reporting trailing profits -- and Alteryx only barely so -- could have investors questioning how well these companies will be able to weather the coronavirus crisis if it doesn't blow over soon. (Trade Desk is in a somewhat safer position, with nearly $100 million in profits booked over the past year -- but even so, at a P/E ratio of 140, it's far from cheap).
Long story short, today is a "risk off" kind of a day for the markets. Investors don't like risk, and they're removing (what they believe to be) the riskiest stocks from the table.