Please ensure Javascript is enabled for purposes of website accessibility

Why Nutanix, Uber, Yelp, Zillow, and Fastly Stocks Dropped Today

By Evan Niu, CFA - Mar 11, 2020 at 4:04PM

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

Tech stocks are taking a beating as the WHO declares the coronavirus outbreak a pandemic.

What happened

Fears around the economic impacts of the coronavirus outbreak continue to drive extreme volatility following the World Health Organization's (WHO) decision today to formally declare the crisis a pandemic. Tech stocks, particularly those with generous valuations, have taken a beaten.

  • Nutanix (NTNX 1.64%): closed down 9%
  • Uber (UBER 4.30%): closed down 9%
  • Yelp (YELP 0.32%): closed down 14%
  • Zillow (Z 6.05%): closed down 9%
  • Fastly (FSLY 3.79%): closed down 12%

Here's how the disease could impact these companies.

Red stock chart with white arrow going down.

Image source: Getty Images.

So what

When reporting fourth-quarter results last month, Nutanix warned that the outbreak was impacting demand in its Asia-Pacific-Japan (APJ) geographic segment. In response, the company reduced its billings guidance for 2020.

Nutanix has also started to pause hiring activities amid the uncertainty, while monitoring to see if the disease continues to spread into other countries. Unfortunately, the virus is gaining momentum in certain regions like Europe and parts of the U.S.

Ridesharing leader Uber hasn't provided much commentary regarding the coronavirus beyond vague and relatively generic acknowledgments in its recent 10-K annual report. However, domestic rival Lyft has suggested that Uber will feel more of a negative impact since Uber operates in far more countries around the world. Lyft has seen an uptick in demand that's partially related to an incremental shift in consumer demand from public transit to private ridesharing.

Online review platform Yelp should face relatively less risk related to the coronavirus compared to other tech companies. Like Uber, Yelp didn't mention the outbreak in its latest earnings release but snuck in generic risk factor legalese in its 10-K. The company merely said that public health crises such as the COVID-19 outbreak could "have a substantial impact on employee attendance or productivity."

Home-listing site Zillow has not acknowledged the pandemic in earnings releases, conference calls, or even its annual report. As investors flock to bonds, prices are rising and pushing down yields, which affect mortgage rates. "Much remains unknown with this virus and its potential impact on human life and economic activity," Zillow economist Matthew Speakman told MarketWatch recently. "COVID-19 is here, and it will continue to be the main driver of mortgage rate movements in the coming weeks."

As an edge cloud platform, Fastly is also unlikely to see direct impacts to demand from the crisis. The company has not commented on how the coronavirus may impact its financial results, but instead notes that it has taken "temporary precautionary measures intended to help minimize the risk" to various stakeholders. Those measures include temporarily requiring all employees to work remotely and suspending all non-essential travel. The precautionary steps may potentially hurt productivity or sales efforts.

Now what

Concerns around the coronavirus aren't going away anytime soon, so investors should expect more volatility going forward as the world grapples with the worst pandemic in over a decade.

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

Yelp Inc. Stock Quote
Yelp Inc.
YELP
$27.86 (0.32%) $0.09
Uber Technologies, Inc. Stock Quote
Uber Technologies, Inc.
UBER
$21.34 (4.30%) $0.88
Zillow Group, Inc. Stock Quote
Zillow Group, Inc.
Z
$33.67 (6.05%) $1.92
Nutanix Stock Quote
Nutanix
NTNX
$14.87 (1.64%) $0.24
Fastly, Inc. Stock Quote
Fastly, Inc.
FSLY
$12.05 (3.79%) $0.44

*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 analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

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.