Editor’s note: This article has been updated with Friday’s closing stock prices.
U.S. stock prices this week took their worst pummeling since the 2008 financial crisis, battered by coronavirus fears. But shares of some big Georgia companies were hit even harder.
Among the locals pounded the most: Delta Air Lines, UPS, Southern Company, Aflac and packaging giant WestRock.
For the week, the stock price plummeted 20% for Atlanta-based Delta, the world’s biggest airline by revenue.
During the same period, the share price dropped more than 18% for Sandy Springs-based WestRock, a major box producer with more than 300 facilities around the world, including some in China.
Columbus-based insurer Aflac, which generates the majority of its revenue in Japan, lost nearly 17%. Both UPS, the package delivery giant headquartered in Sandy Springs, and Georgia Power parent Southern Company fell more than 12%.
The S&P 500 Index, a measure of the broader U.S. stock market, fell 11.5% this week. A bit more than a week ago, the index had climbed to a record closing high, before investors began running to the exits Monday morning as coronavirus cases soared outside China.
Coronavirus concerns are now widespread, but there are particular worries about its impact on companies heavily reliant on global connections.
Delta is heavily exposed to international travel, UPS to international trade. Aflac is exposed to life and cancer insurance policies it has written in Japan, where the COVID-19 virus surged in recent days. WestRock supplies packaging used in the movement of goods.
Transportation and logistics companies were among the first that saw a decline in stock price due to the virus, but the impact broadened as industry watchers say the spread of the virus is causing the shutdown of Chinese factories, disrupting supply chains for companies across many industries. The virus and attempts to contain it are also causing a steep drop in travel to Asia.
The first reported instance in the United States of a case of coronavirus suspected to result from spread in the community rather than being tied to travel to China raised the prospect that the virus could spread more quickly domestically.
On Thursday, an investor note from investment bank Goldman Sachs warning of the possibility that profits of companies in the S&P 500 might see no growth this year drove more jitters, causing the stock market to open with another steep decline. The reduced forecasts reflect the severe decline in Chinese economic activity, lower demand for U.S. exporters, supply chain disruption, a slowdown in U.S. economic activity and higher uncertainty, according to Goldman Sachs.
But, Goldman Sachs warned, “A more severe pandemic could lead to a more prolonged disruption and a US recession.”
The tech sector is expected to be affected quickly, as the supply chain for high-value goods from China is disrupted.
The effect of delays and disruptions could also extend to shipments of Halloween or Christmas merchandise, according to Barbara Hoopes, Virginia Tech associate professor of business information technology. Service industries like hotels, airlines and restaurants “are not likely to make up sales” when the economy recovers, she says.
All of the 10 biggest Georgia publicly traded companies had steep declines in their stock prices for the week, including roughly 11% drops for both Home Depot and Coca-Cola Company.
UPS has warned the virus will have some impact on its international business this quarter. Delta said its operations could be disrupted if employees are quarantined or if travel restrictions affect its operations.
“Given the uncertainty about the situation, we currently cannot estimate the impact to our financial statements,” Delta said in its annual report earlier this month.
The International Air Transport Association said last week it expects the virus will reduce global traffic by 4.7% this year, or $29.3 billion in lost passenger revenues, causing the first overall decline in demand since the global financial crisis of 2008-2009.
“These are challenging times,” said IATA CEO Alexandre de Juniac in a written statement.
The virus is cutting into business travel, corporate meetings and events, according to one industry group.
The Global Business Travel Association says the coronavirus “has the potential to threaten the entire global business travel industry,” estimating it could take a $46.6 billion toll per month on business travel-related spending including airlines, hotels, rental car agencies, ground transportation, restaurants and entertainment.
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