What happened

Shares of retailer American Eagle Outfitters (NYSE:AEO) and casino operator MGM Resorts International (NYSE:MGM) both fell as much as 5% in morning trading on Tuesday. Groupon (NASDAQ:GRPN), which describes itself as an "experiences marketplace," fell even more, dropping around 7% at one point early in the day.

With no particular news out of any of these companies, the big story driving the declines today is most likely the new variant of the coronavirus, omicron, that has started to spread around the world. But the finer details are kind of interesting when it comes to this trio. 

A person holding their face with a computer showing stock losses in the background.

Image source: Getty Images.

So what

The easiest story to grasp onto is MGM Resorts, which operates casinos. Investors are likely worried that a resurgence in COVID-19 cases will lead people to stop visiting the company's gaming establishments. That's not unrealistic at all, though a bigger threat could be another round of business shutdowns driven by governments attempting to slow the spread of yet another pandemic surge. While that's not on the table right now in the United States, it would be just as devastating as what took place in 2020 if it did happen. And such a shutdown could take just as long to recover from. Notably, MGM Resorts' $2.7 billion in revenue in the third quarter of 2021 was up materially from the $1.1 billion it earned in 2020, but was still well below the $3.3 billion top line it posted in 2019, before the pandemic. Indeed, another coronavirus-related setback wouldn't be a good thing for this still-recovering casino operator.

Groupon is a little more nuanced. The company's business model has been in a state of flux for a little while. At first it simply sold coupons that could be used at restaurants and other brick-and-mortar venues. Then it switched to selling physical products. And now it is shifting back to selling coupons, for "experiences." In some ways this is a better idea than trying to compete with retailers selling physical products, and it keeps the company's purpose aligned with its history and consumer perceptions. However, the latest shift is really just starting to gain traction now, noting that of the $553 million in billings in the third quarter, 76% was from local businesses. These are likely to be some of the hardest-hit businesses if there's a pandemic resurgence.

American Eagle Outfitters' story is twofold. The simple take is that its main brands, American Eagle Outfitters and Aerie, will likely see sales headwinds if people choose to, or are asked to, stay home because of fears about the new coronavirus variant. However, there's a more subtle story here as well. The retailer has acquired a couple of supply chain companies over the past year with the aim of shoring up its own distribution systems and of offering its services to others. That's a great idea, but not if a new coronavirus variant results in store closures. Indeed, if that were to happen, these acquisitions could possibly turn into a net negative over the short term, getting hit from reduced internal and external use, even if they are a long-term positive.

Now what

Wall Street is mercurial. On Friday, when reports of the new variant started to gain some traction in the media, the market tanked. On Monday the market rebounded a bit as investors got back from the Thanksgiving holiday. But today fear about omicron has resurfaced with a vengeance, and businesses that could be exposed are getting hit, some more than others, given their exposure to person-to-person transactions. Although American Eagle Outfitters, Groupon, and MGM all have interesting and unique stories on this front, in the end, the big picture is largely the same. And then again, tomorrow investors could change their minds one more time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.