Microsoft’s stock (NASDAQ: MSFT) fell about 8% between March 8, 2020 and March 24, 2020 (compared to an 18% drop in the S&P 500), and the stock is down almost 13%. since January 31 after WHO declared a global market. health emergency in light of the spread of the coronavirus (compared to around 27% decrease since the S&P 500).
Looking back on the 2008 financial crisis, we find that Microsoft’s stock has dropped from just over $ 22 in October 2007 (the pre-crisis peak) to levels of almost $ 12 in March. 2009 (when the markets hit bottom), which implies a 44% drop from its approximate pre-crisis peak. This marked a smaller decline than the broad S&P, which fell 51%.
Will Microsoft’s stock recover in a similar way once the coronavirus epidemic is under control? We compare Microsoft’s performance against the S&P 500 in our interactive dashboard analysis, “Comparison of the 2007-08 and 2020 crisis: how did Microsoft’s stock price compare to the S&P 500? “
In particular, Microsoft recovered strongly after the 2008 crisis to levels of almost $ 24 in early 2010 – up 92% between March 2009 and January 2010. In comparison, the S&P rebounded by around 48% over the same period. Although the stock has (so far) fallen by about half of what it did during the 2008 crisis, it is possible that it will fully recover to pre-coronavirus crisis levels, which implies a 30% rebound as the crisis ends.
Monday March 9, the Stock Exchange entered a phase of extreme volatility, with two massive sales Monday and Thursday separated by days of partial recovery. Overall, two distinct trends have resulted in the recent massive sale. First, the growing number of coronavirus cases outside of China is raising growing concerns about a global economic slowdown. Second, crude oil prices have dropped more than 20% after increased production in Saudi Arabia.
MSFT’s stock has suffered while countries around the world are stranded. As industries have stopped production and services, the demand for software and web services has also taken a hit with consumers focusing only on essential, non-discretionary products. We believe Microsoft’s fiscal results for the third and fourth quarters will confirm this reality with declining revenues in many of its segments. That said, the company is also well positioned to benefit from the growing number of people working from home around the world through its software portfolio as well as services for remote collaboration.
Microsoft’s action has the potential to recover its losses over the next few months, but the actual gain and timing depend on the broader containment of the spread of the coronavirus. Our dashboard forecast of COVID-19 cases in the United States with cross-country comparisons analyzes expected recovery times and possible spread. Yes the signs of containment of the coronaviruses are not clear by the last week of April when profits in the third quarter are expected, it is likely that the actions of Microsoft (as well as the wider market) will fall further.
In addition, our dashboard -28% coronavirus crash against 4 historic crashes creates a complete macro image. It complements our analyzes of the impact of the coronavirus epidemic on a diverse set of multinational Microsoft peers, including Amazon and Salesforce.com. The complete set of impact and synchronization analyzes of coronaviruses is available here.
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