Seagate Technologies Drops 25% in One Month, May Outperform S&P in …
On March 16th, stock markets fell 12% following a week in which an increasing number of cases of COVID-19 were reported alongside a sharp drop in global crude oil prices. The drop marks the largest market sell-off since 1987 and one of the largest drops in history.
Markets recovered by 6% the next day thanks to an expected federal stimulus package but dropped again by 5% on March 18th. The next day, experts reported marginal market growth, although numbers remain low.
The primary cause of the market crash is growing concern about the U.S.’ increasing number of coronavirus cases. On March 11th, the World Health Organization declared COVID-19 a pandemic, further mounting concerns of a global economic recession.
The second source of declining market confidence is rooted in an ongoing price war between Saudi Arabia and Russia; in mid-March, Saudi Arabia increased production and lowered prices in a bid that spooked global investors.
Seagate Technology stock has dropped 25% since early February, sinking by 13% between March 9th and March 19th alone. Based on trends from the 2008 recession, it is still quite likely that the stock could see a strong recovery within the coming months and might even perform better than other stocks before the crisis ends.
Data comparing the performance of Seagate Technology stocks and S&P 500 stocks during the 2008 economic crisis and today’s numbers reinforces this logic.
Prior to the 2008 crisis, Seagate’s stock hovered around $16 in October 2017. As the markets reached rock bottom in March 2009, it dropped to around $3 before recovering to just over $11 in the early months of 2010.
Seagate’s overall stock decline measured around 83% from its pre-recession peak. By contrast, the S&P declined around 51% in the same period.
However, Seagate Technologies’ stock recovered much faster than the S&P. Seagate stock rose 324% between March 2009 and January 2010, during which time the S&P only rose about 48%.