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SUMMARY
BNY Mellon (NYSE: BK) stock declined by about 12% between 8th March 2020 and 31st March 2020 ( vs. a 13% decline in the S&P 500). However, the stock is down almost 25% since February 1 after the WHO declared a global health emergency in light of the coronavirus spread (vs. about 22% decline in the S&P 500 since then).There were two distinct trends driving the sell-off. Firstly, the increasing number of Coronavirus cases in the U.S and other countries outside China is causing mounting concerns of a global economic slowdown (on Wednesday, March 11, WHO declared coronavirus a pandemic outbreak creating further panic in the markets). Secondly, a sharp decline in crude oil prices after Saudi Arabia increased production in a price war with Russia spooked the investors further.Drawing lessons from the 2008 financial crisis, we see BK stock declined from levels of around $35 in October 2007 (the pre-crisis peak) to levels of around $18 in March 2009 (as the markets bottomed out). Implying BK stock lost as much as 49% from its approximate pre-crisis peak. This marked a lower drop than the broader S&P, which fell by as much as 51%.We compare the performance of BNY Mellon vs the S&P 500 in this analysis here.
2020 Coronavirus/ Oil Price War Crisis
Timeline of 2020 Crisis So Far
12/12/2019: Coronavirus cases first reported in China1/31/2020: WHO declares global health emergency.2/3/2020 to 3/31/2020: S&P 500 sees ~22% drop as COVID-19 cases accelerate outside China. Doesn't help that oil prices crash in mid-March amid Saudi-led price war
Bank of New York Mellon Performance During 2020 Coronavirus/Oil Price War Crisis
BNY Mellon stock declined by about 12% between 8th March 2020 and 31st March 2020 and the stock is down by about 25% since February 1, after the WHO declared a global health emergency.
BK Stock: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
S&P 500 Index Performance During 2020 Coronavirus/Oil Price War Crisis
The S&P 500 declined by 13% between March 8 and March 31, 2020 and it has fallen by 22% since February 1st.
S&P 500 Index: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
2007-08 Financial Crisis
Timeline of 2007-08 Crisis
10/1/2007: Approximate pre-crisis peak in S&P 500 index9/1/2008 - 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)3/1/2009: Approximate bottoming out of S&P 500 index1/1/2010: Initial recovery to levels before accelerated decline (around 9/1/2008)
Bank of New York Mellon Stock Performance Over 2007-08 Financial Crisis
BNY Mellon stock declined from levels of around $35 in October 2007 (the pre-crisis peak) to $18 in March 2009 (as the markets bottomed out) and recovered to levels of about $23 in early 2010.Through the crisis, BK stock declined over 49% from its approximate pre-crisis peak. This marked a lower decline than the broader S&P, which fell by as much as 51%.
BNY Mellon stock saw some recovery from the lows, rising by over 28% between March 2009 and January 2010. The growth was lower than the S&P, which rose by about 48% over the same period.
BK Stock: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
BK Stock: Cumulative % Change from 10/1/2007
S&P 500 Performance Over The 2007-08 Financial CrisisThe S&P declined from levels of around 1540 in October 2007 to levels of around 760 in March 2009, and recovered to levels of 1120 by January 2010. Through the crisis, the S&P declined by as much as 51% from its approximate pre-crisis peak.
S&P 500 Index: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
S&P 500 Index: Cumulative % Change from 10/1/2007
Survival Check
It will recover - however, a final check: Can Bank of New York Mellon in fact stay solvent through the Coronavirus crisis?
Are cash from operations going to cover for interest expense and investments needed?
BK Interest Expense
BK Cash from Investments (-ve is Cash Used)
BK Cash from operations
Conclusion
While BNY Mellon stock has declined due to the Coronavirus/Oil Price War crisis, going by trends seen during the 2008 slowdown, it has a potential upside of around 10% as the crisis winds down and the stock partially recovers back to pre-coronavirus levels.
Related Analyses
BNY Mellon2007-08 vs. 2020 Crisis Comparison: How Did Morgan Stanley Stock Fare Compared with S&P 500?2008 vs. 2020 Crisis Comparison: How Did Goldman Sachs Stock Fare During Coronavirus Crisis Compared to S&P 500?Forecasting US COVID-19 cases with cross-country comparisons-28% Coronavirus crash vs 4 Historic crashes Coronavirus impact and timing analyses