Wall Street tech company analysts say that they're having trouble calming clients down as fears of a recession swirl: 'I spend every day hand-holding investors.'
- Tech analysts say the coronavirus crisis hit the sector hard, but they face challenges in explaining what's going on in the industry to a jittery Wall Street. "I just spend every day hand-holding investors," Wedbush analyst Daniel Ives told Business Insider.
- Analysts say the suddenness and magnitude of the slump has made it hard to make projections, and it's also been tougher to evaluate the industry because they're not able to travel and hold in-person meetings with companies and investors.
- Jefferies analyst Brent Thill said tech companies offer a grim view of the situation. "Everyone is saying, 'This is a bigger problem than we saw in the (2008) financial crisis. It's a bigger problem than we saw in the dotcom crash,'" he told Business Insider.
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Over the past few weeks, Daniel Ives has been getting emails at three in the morning from investors looking for insights into how the coronavirus crisis has affected the tech giants he covers as a Wall Street tech analyst.
The global pandemic has triggered a broad market selloff that hit the tech sector hard, sending tech-heavy Nasdaq Composite Index plunging 25% over the past eight weeks.
"Right now, everyone's looking at their portfolio, trying to understand where the opportunities are, versus where there's treacherous waters," Ives, managing director for equity research at Wedbush, told Business Insider. "I just spend every day hand holding investors."
Tech analysts had had to do that too in previous downturns, but it's become a tougher part of the job due to the magnitude of the crisis. Unlike in other slumps, tech analysts are also wrestling with new challenges.
A downturn and a pandemic
Overall, getting information about an industry known to change rapidly is tougher in a time of grave economic turbulence. The fact that people are dying in cities like New York makes the job even harder.
Ives of Wedbush cited "a level of emotion" in conversations with investors who have friends and families and are no doubt also affected by the human toll of the pandemic.
"Our job is half stock picker, but also half just being there to listen to people regardless of what we're talking about," he said.
The emotional toll also extends to some of the analysts. Bernstein Research Stacy Rasgon, who lives in Los Angeles, but was once based in New York, said he worries about the city which has been hit hard by the pandemic.
"I've got a lot of friends and clients clients in New York and New York is kind of turning into the epicenter," he told Business Insider. "I'm quite concerned."
The suddenness and the magnitude of the crisis has been simply jarring for Wall street and the tech industry, the analysts say.
Jefferies analyst Brent Thill said there had been speculation that another downturn was bound to happen. But many investors and analysts expected it to be a mild jolt possibly triggered by the recent trade disputes between the US and China.
The recent crash was totally unexpected just a few months ago. After all, "we were coming off one of the best economies we've ever seen," Thill said.
Figuring out what has changed in tech and where the industry is headed has become even tougher with the constraints on travel.
Like the rest of the world, Wall Street tech analysts are working from home, relying on emails and phone and video calls. Because they can't travel, some of them feel that they're missing out on information and insights he gleaned from in-person meetings, company tours and tech conventions.
'Unlike anything I've seen'
Ives, a 20-year Wall Street veteran who's been through "loud shock events," including the Great Recession in 2008 and the dot-com crash, said the current crisis is "unlike anything I've seen."
"It's because of the health issues and because of being locked in houses and not being able to do a big piece of our job which is visiting companies, visiting clients and getting a better sense as to what's going on," he said.
Rasgon of Bernstein Research, who covers semiconductor companies, said he hasn't traveled since mid-January, "the longest in my professional career." The inability to travel is affecting a key part of his job. Being a tech analyst "is a relationship job," he told Business insider.
Wedbush analyst Matt Bryson, who covers chipmakers and PC manufacturers, had been scheduled to be in Asia in March when the crisis escalated derailing his travel plans. He frequently visits China, Taiwan and Japan where he said people there are less likely to check voicemails frequently, and "you sometimes get less of a response on email."
"Asian culture is different," he told Business Insider. "There's a lot that gets done face-to-face. It doesn't happen over the phone, and it can't get done by email."
For Thill of Jefferies, not being able to travel and hold in-person meetings have been less of an issue.
In fact, he says it feels like he's getting more things done working from home, and not spending any time at airports or in the air. He's been on the phone or on video calls a lot over the past weeks, which he said has given him more time to engage in meaningful conversations.
"I could argue that the quality of the work because you're spending more time actually doing the due diligence rather than traveling to see a client," he told Business Insider.
He said the crisis may end up separating "the good analysts from the bad analysts because if you don't know how to get data and information on the industry you're done."
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