Facebook and Alphabet, the parent company of Google, would both be in trouble in a broad market sell-off caused by the global coronavirus pandemic, analysts said, adding they’ve also “seen a lot worse” overall, CNBC reported.
According to analysts from Evercore, both tech giants would be looking at a 30 percent to 40 percent drop in stock values if the sell-off were to happen. Both companies were about 25 percent off from their 52-week highs, analysts said, but they still had much more room to go before panic would set in.
Alphabet trades at 18.5 times earnings but has been as low as 11.5. The number during the 2008 financial crisis was 13.5, analysts noted. Under the values from 2008 applied to today, Alphabet would be trading at $715 to $830 per share, while it currently sits at around $1,100 per share.
The Evercore analysts said Facebook has not traded lower on an overall basis, but strange and unique concerns have risen concerning growth in the future. Facebook has traded at a 15 percent discount compared to Google over the last year, and if the trend continues, Facebook will be looking at a $120-per-share rate. Currently, the social media company trades at $150 per share.
On Monday (March 16), shares for Alphabet had dipped 9.5 percent during the afternoon while a broad market sell-off was going on, while Facebook’s had fallen over 11.6 percent.
The coronavirus pandemic, which has killed thousands worldwide and caused quarantines among the healthy populace to prevent further spread, has also proven to be a detriment to global stock markets. The new norm is fast approaching numerous days with 5 percent down in whatever market one could pick. Oil prices have fallen, and several days have seen the worst trading numbers in the markets’ histories.
Initial public offerings (IPOs) have also taken a hit, with the root of the pullback being in the suddenly unpredictable valuations, which change day to day depending on how things are going.