Not a long ago, on February 19, U.S. stocks shut at a record high, and four big tech companies drove the said rally, each of them was valued over 1$ trillion. Looking at the values of these companies now, on March 19, exactly one after the massive rally, we come to know that these tech organizations – Alphabet, Microsoft, Apple, and Amazon – along with other big tech player Facebook have lost a total of $1.3 trillion in the market cap.
The massive fall may be backed by the lethal spread of covid-19 virus disease that has got the entire economy into its grips.
These tech companies are hit even harder as the headquarters of these tech companies – The Seattle area, for Amazon and Microsoft, and the San Francisco-Silicon Valley corridor, where Facebook, Alphabet, and Apple are based, are the areas in the U.S. where the coronavirus has spread the most.
The stock market is seeing massive losses as a whole because of the fear that the entire economy would come to an enormous fall courtesy of the said virus.
The impact first began when the virus led large business organizations, including the assembling plants and tech equipment inputs suppliers, were forced to halt their operations altogether. This led to a massive amount of negative impact on the businesses, not just in China but throughout the world. The tech companies have also agreed to the enormous production impact as Apple said in mid-February that iPhone supply issues and diminished Chinese interest would hurt quarterly outcomes. Towards the end of February, Microsoft said “supply chain is returning to normal operations at a slower pace than anticipated”
In any case, this will lead to spike in the no. of unemployed people in the United States as the organizations face massive challenges about the continuance of their business operations amid the outbreak. Apple said throughout the end of the week that till March 27, it would close the entirety of its stores just outside of Greater China.
Canaccord Genuity Analyst stated his concerns for these tech companies “Following last month’s COVID-19 pre-announcement reductions to our estimates, we are further lowering our estimates given expectations for continued soft near-term results given the prolonged impact through at least Q3/F′20 on global smartphone supply and demand,” Walkley wrote.
The effect is not only to the customer demands, but the employees are restricted from working due to safety concerns. Amazon has recently disclosed that one of the workers in N.Y. based Amazon Warehouse was tested positive for coronavirus, which caused shutting down of the warehouse altogether.
Facebook and Google, in the interim, are dependent on online promotions, and marketing divisions will, in general, cut their spending limits when the markets ease back.