What happened

Shares of radio-frequency identification solutions provider Impinj (PI -4.72%) tumbled on Tuesday despite no company-specific news. The retail industry is in turmoil as temporary store closings become necessary to slow the spread of the novel coronavirus in the U.S. With retail a key growth area for Impinj, the company's results could be severely damaged.

Impinj stock was down 5.8% at 10:50 a.m. EST. It was down as much as 12.5% earlier in the day.

So what

Around 10 billion apparel items annually have RFID tags to help retailers track inventory. The opportunity in apparel retail alone is roughly 80 billion items annually. Outside of apparel, categories like cosmetics, home goods, and food are the areas Impinj sees as ripe for RFID adoption.

A declining chart.

Image source: Getty Images.

Impinj makes money selling consumable RFID tags as well as systems and readers that allow customers to manage those tags. Winning new customers is going to be tough for a while, and existing customers will likely purchase fewer tags as demand for apparel drops amid the novel coronavirus pandemic.

Late Monday, department store Nordstrom announced that it was closing its U.S. and Canada stores for two weeks in an effort to slow the spread of the virus. Nordstrom's move could trigger other retailers to follow suit, and the closings could last for longer than two weeks if the outbreak isn't contained. The prospect of mass retail store closings is not good news for Impinj.

Now what

Impinj guided for first-quarter revenue between $37 million and $41 million earlier this month, which beat analyst expectations. But that outlook may not be realistic if retail stores begin closing in large numbers.

With uncertainty running high, investors punished Impinj stock on Tuesday as the retail industry entered uncharted territory.