Please ensure Javascript is enabled for purposes of website accessibility

Why Intel Stock Dropped 13% in February

By John Ballard - Mar 6, 2020 at 2:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors worry about Intel's ability to sell chips amid the coronavirus outbreak.

What happened

Shares of Intel (INTC -0.86%) lost 13.2% last month, according to data provided by S&P Global Market Intelligence. Intel delivered strong quarterly earnings results at the end of January, but the broad market sell-off caused by the outbreak of COVID-19 sent the shares down in late February.

Intel recently said that the impact from the virus has been "modest," but supply for PC chips has been tight, so executives believe the virus wouldn't have had a big impact anyway. 

A machine holding a computer processor.

Image source: Getty Images.

So what

With key properties in China, Intel would be vulnerable to sustained spreading of COVID-19. It has a manufacturing plant in Dalian used for NAND flash memory products, and a testing and packaging facility in Chengdu. Intel also has design centers in Shanghai and Beijing, but these were not the hardest hit areas by the virus, so the chip giant has faced limited disruption so far.

However, as Intel CFO George Davis explained at a recent Morgan Stanley conference, customer "supply chains are being disrupted," and that could delay shipments of components in the short term. 

Now what

While the outbreak in China seems to be under control with the number of confirmed cases plateauing around 80,000, the rest of the world is seeing infections rise. The latest data from Johns Hopkins shows that the number of cases in the U.S. has more than doubled in the last week, reaching 245. 

Obviously, until the situation stabilizes, markets are going to be jittery. This development is a setback for Intel, which had been seeing its stock price rise, as the company began to gain some momentum. During the fourth-quarter conference call, management outlined plans to release nine new products centered around its 10-nanometer chip technology this year. 

Currently, analysts expect Intel to report 2.3% growth in revenue and a slight improvement in earnings in 2020. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
INTC
$41.65 (-0.86%) $0.36

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.