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 (NASDAQ:NTNX): closed down 9%
- Uber (NYSE:UBER): closed down 9%
- Yelp (NYSE:YELP): closed down 14%
- Zillow (NASDAQ:Z): closed down 9%
- Fastly (NYSE:FSLY): closed down 12%
Here's how the disease could impact these companies.
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.
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.