You’d think that given that half the world is in home quarantine, Big Tech firms would be making a killing selling digital services to the homeridden. Well, that doesn’t seem to be the case, as even the big untouchables have suffered, particularly during yesterday’s stock market slaughter.
In one of the stock market’s worst days since the 2008 financial crisis, the Big Five of Big Tech (FAMGA) lost a whopping $321.6 billion in value.
This is how much each company’s stock fell:
- Facebook: -6.42%
- Apple: -7.91%
- Microsoft: -6.78%
- Alphabet (Google’s parent company): -6.17%
- Amazon: -5.3%
Meanwhile, other tech firms weren’t spared. Netflix saw a 6.09% dip, while Tesla suffered a 13.57% drop. In fact, only nine members of the S&P 500 ended the day in the green, and none were from the tech sector, CNBC highlighted.
What’s the direct impact?
Many of these tech firms also had to cancel some of their annual conferences, or had to pull out of others. These include the now-cancelled South by Southwest Film Festival, Google’s I/O, Facebook’s F8 developer conference, and the Mobile World Congress. Most of these firms have also sent many of their employees home.
iPhones sales have dropped 61% year-on-year in February, with Apple temporarily closing all of its 42 stores in mainland China, one of its biggest and most important markets. It also said it will miss quarterly revenue guidance.
Google has had to temporarily shut down many of its East Asian offices, while also switching a Google Cloud conference to a digital-attendance only affair.
Facebook will similarly hold its F8 conference digitally, while expecting delays in production of its Oculus VR headset.
Many Amazon sellers have been hurt with the economic slowdown of China, and the e-tailer giant itself has had to remove more than 1 million listings for items claiming to cure or defend against the coronavirus, according to a report from Reuters.
Microsoft, like Apple, has also tempered quarter earnings expectations, expecting to see a hit to Windows OS and Surface device sales.
It goes without saying that the Coronavirus outbreak is to blame for Big Tech’s latest woes, which when compounded with the ongoing price war among oil producers is simply a recipe for investor disaster. While 2019 Q4 reports for many of these top companies had showed positive trends in corporate earnings figures, they simply couldn’t hold under the pressure of mounting problems that have simply piled on as of late.
First, many of these tech firms had to contend with a trade war that has been raging between China and the US for over a year, with many Chinese firms finding themselves on a US-drafted blacklist. Many of those Chinese companies develop semiconductors for use in computer chips, and now they were forbidden from doing business with US firms, and vice versa. Supply chains naturally suffered. With a Huawei ban soon after, a major player in the field of 5G, the future of the new wireless technology was also up in the air, slowing the development of numerous new industries that would arise upon its mainstream adoption.
By the start of 2020, tech firms also had to deal with the reality of a new viral outbreak in China, which led to many factories sending employees home and closing down, further disrupting supply chains and consumer markets. Now, as the influence of Covid-19 on the global economy matures, we are seeing compounded new issues, such as the aforementioned oil price war and stock market crash.
This is all bizarre given that the novel Coronavirus is less likely to kill people than the common flu is, which begs the question if the world is blowing this supposed pandemic out of proportion. Currently, there have been 116,244 cases reported, and 4,089 deaths confirmed. The initial mortality rate was recorded at 2%, though this figure is preliminary and will likely change as the outbreak progresses.