Stocks fell sharply today, bringing yet more unwelcome volatility to tech shares

Are you tired of TechCrunch reporting on the daily stock market gyrations? Well, we’re tired of writing about them. And yet here we are, because stonks yet again did wild things that we have to talk about.

Markets are still skittish about the effect the rapidly spreading novel coronavirus, COVID-19, will have on the economy. And the U.S. is still figuring out exactly how many people in the country have been infected by the virus, and how aggressively it may need to respond. So far, the U.S. Centers for Disease Control and Prevention has identified 99 cases across 13 U.S. states. Ten people have died from the virus.

In case you’ve missed our last half-dozen posts discussing the stock market’s wild jumps and drops, we’re writing about this stuff because the startup companies we know and love don’t exist in a vacuum. What happens on public markets impacts the private markets, helping set valuations through comps and molding sentiment. And the world of startup finance isn’t divorced from the rest of the economy (as much as it would sometimes like to be).

So when something Very Good, or, like today, Very Bad happens, we take note. What follows is the TechCrunch Public Market Guide For Private Market Folks, March 5, 2020 Edition.

What happened?

The sound you heard emanating from lower Manhattan today that felt akin to a thousand dishes shattering at once was all the major indices dropping in unison. Here’s the damage (CNBC data):

  • Dow Jones Industrial Average: -969.58, or 3.58%
  • S&P 500: -106.18, or 3.39%
  • Nasdaq Composite: -279.49, or -3.10%

The Nasdaq closed at 8,738 and change, making it still richly valued compared to say, a few years ago. But what hasn’t happened is a return to recent, record highs. Tech shares have fallen, and despite the recent trading back-and-forth, they’ve not recovered all their lost ground.

SaaS companies look about the same, having lost some altitude to a recent trading range (a large one, but one that has also become regular in its huge point and percentage swings) that is a material gap lower than before. Tech shares have broadly repriced.

The reduced valuations might be a new normal, although some analysts feel like the bottom has yet to fully fall out of the market. Facebook, Apple, Amazon, Alphabet and Netflix were all down between 2.5% and nearly 5%, with Alphabet giving up the most ground, losing 4.84% of its value (falling $66.84) to close at $1,314.76.

It’s impossible to predict how the markets will move next. The U.S. Congress has authorized an $8.3 billion aid package to support government’s response to the illness, but as companies wrestle with their responses to the illness, it’s worth noting that productivity is bound to be effected. The questions are how much and for how long.