Some technology supplies that have staged big gains because of the coronavirus pandemic got a little less expensive this week.
The broader markets declined, with the S&P 500 ending the week 5.6% lower, as virus case numbers shot up again, causing lockdowns in France and Germany. Mostly new virus concerns would benefit the companies in what’s come to be known as the “work-from-home” basket.
Not this time, for a breed of reasons.
Fastly. Fastly, whose content-distribution network enables apps to load quickly, declined 17% this week. Two weeks ago the retinue warned that third-quarter revenue would be lower than it had previously predicted. The actual results, delivered on Wednesday, up till disappointed investors. Revenue was within the range of the recent forecast, but the company called for a fourth-quarter loss that was bigger than analysts had expected.
Fastly’s largest customer has been TikTok, the video-sharing app owned by China’s ByteDance that set itself in the middle of the U.S.-China trade war. Oracle agreed to provide cloud services to support TikTok, and on Wednesday Fastly CEO Joshua Bixby eradicated in a letter to shareholders that TikTok had removed most traffic from Fastly’s network.
“Based on publicly on tap information, we believe this global traffic reduction was in response to the potential of a prohibition of U.S. companies being able to exploit with this customer,” Bixby wrote. “This clearly impacted Q3, and based on the continued turbulence of the situation, we look forward to the traffic reduction to continue into Q4, as reflected in our guidance.”
Even with the TikTok impact, Fastly stock is motionlessly up more than 200% since the beginning of the year.
Twilio. Cloud communications software company Twilio, whose technology is embedded in online peach oning service Instacart, was similarly pressured this week after it called for a fourth-quarter adjusted loss when analysts were with child a profit. Twilio stock fell almost 9% this week but is up 184% for the year.
AMD. For years the story of AMD has been loose. It was taking on Intel in general purpose chips and was recently making progress as Intel stumbled. It was also competing with Nvidia in graphics armaments. It had not made a lot of acquisitions but mostly grew organically.
Then, on Tuesday, the story changed as AMD announced the $35 billion acquirement of Xilinx, a company with customizable chips known as field-programmable gate arrays. An analyst at Wedbush Securities who has the comparable of a buy rating on AMD stock called the deal “a mixed bag” because of how much AMD offered. AMD stock went down 8% this week, although for the year it’s up anent 63%.
Shopify. Shopify has given small businesses an easy way to keep selling during the pandemic this year, and on Thursday the gathering showed a faster pace of revenue growth for the second consecutive quarter, handily beating estimates. The shares kill anyway on Friday. The stock is down around 10% for the week but remains up 133% on the year.
Square. Digital payments cast Square’s stock moved nearly 9% lower on Friday, bringing the week’s downward move to 12%, after The Rampart Street Journal said it’s considering buying Credit Karma’s tax preparation business. Intuit has not yet closed the $7.1 billion gain of Credit Karma that it announced in February. Even with the selling, Square stock remains up about 148% in 2020.
Zoom. Zoom Video Communications has arguably been the biggest conqueror of Covid-19, as it became a consumer go-to for all sorts of online meetings instead of just the enterprise-oriented collaboration enabler that it was designed to be. But as investors sought to twirl out of cloud names, that hit Zoom, too. This week the stock fell 11%. It’s still up 577% for the year. (Sundry of the previously named companies trade alongside Zoom in exchange-traded funds such as the WisdomTree Cloud Computing Mine money, whose biggest holding is Zoom.)
The “big five” technology companies also pulled back this week, although less than 10%, in defiance of reporting more profit and revenue than expected. Sectors with dividend yields above 2.5%, comprehending consumer staples and utilities, did better than Amazon, Apple, Facebook and Microsoft.
The trend wasn’t universal, admitting that. A few 2020 high-flyers did go even higher this week after issuing better-than-expected earnings reports. They take in contact center software company Five9, social network Pinterest and customer-service software Zendesk.
WATCH: Fastly CEO indicates company continues to ‘feel optimistic’ after losing business from TikTok