When the coronavirus first took the world by storm, many were unclear about its level of severity. China downplayed it at the start, everyone was saying different things, and then, proving its cruelty, the death toll climbed in the thousands.
The impact of the virus on the stock market is causing something similar in the sense that companies are saying different things about the effect of the disease on their financials.
At first, everyone was looking at the mining market, which is fair. That’s the market that tends to be the most impacted by epidemics. Copper prices were falling, while gold was moving higher. Standard. But then our attention switched to the cannabis industry.
Because cannabis companies get everything from vaporizers to packaging from Chinese manufacturers, many stated that companies like KushCo Holdings (OTCQX:KSHB) might be in for some trouble, considering it gets its vaporizers from China. Those products are the company’s primary source of revenue. You can probably do the math on that one. Other cannabis companies are also in this predicament.
The impact the coronavirus is having on the mining industry and the cannabis space, however, is, without downplaying the situation, old news. This week, we’ve learned more about how the technology sector is feeling about the virus that was first identified in late 2019.
Coronavirus Impacting Technology Stocks
According to a FactSet search of the more than 300 earnings calls that were held between January 1 and February 13, the term coronavirus often appeared—as in, 38% of companies included the disease in their earnings discussion.
Still, 34% of companies remained stagnant on what to do. They said it was too early to tell about the future of the disease and its impacts on financials. That, of course, makes sense. When Severe Acute Respiratory Syndrome (SARS) appeared in 2003, the market was expected to enter turmoil; but then, things didn’t end out as bad as was forecast.
Maybe that will happen this time, perhaps not. Technology companies like Apple (NASDAQ:AAPL) and Agilent Technologies (NYSE:A), however, don’t seem overly optimistic.
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What’s Apple Saying?
On Monday, the tech giant said that its revenue is going to take a hit because of the coronavirus outbreak. In a statement, Apple said it doesn’t see itself meeting its Q2 financial guidance because production has slowed or been halted in China.
“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated.”
The next day, technology stocks led the market lower.
What’s Agilent Technologies Saying?
Agilent Technologies is also wary of the impact the coronavirus outbreak is having on its financials. The company stated that it expects a $25 million to $50 million hit in the first half of the year because of the disease, as well as a $10 million loss in revenue in Q1.
“Our performance was impacted by the extension of the Lunar New Year holiday due to the coronavirus. This reduced the number of shipping days in China.”
Half and Half
The coronavirus is visibly impacting companies if giants like Apple aren’t able to meet their financial guidance. Then again, not everyone thinks the virus will have as great of an impact as expected. We saw that with the FactSet search, but we’ve also seen it in the turnaround technology stocks have had since Tuesday.
According to Yahoo Finance, tech companies are leading US stocks higher Wednesday as fears over the disease are already starting to subside. And Apple is one of those technology stocks. At the time of writing, Apple stock is up 1.65%.
That might be a one-off though, with Agilent Technologies stock trading in the red Wednesday. Either way, the direction technology companies move in because of the virus is something investors should watch.
Featured image: PixaBay
