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SUMMARY
BlackRock (NYSE: BLK) stock declined by about 9% between 8th March 2020 and 1st April 2020 ( vs. a 17% decline in the S&P 500). However, the stock is down almost 22% since February 1 after the WHO declared a global health emergency in light of the coronavirus spread (vs. about 26% 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 BLK stock declined from levels of around $128 in October 2007 (the pre-crisis peak) to levels of around $72 in March 2009 (as the markets bottomed out). Implying BLK stock lost as much as 44% 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 BlackRock 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 4/01/2020: S&P 500 sees ~26% drop as COVID-19 cases accelerate outside China. Doesn't help that oil prices crash in mid-March amid Saudi-led price war
BlackRock Performance During 2020 Coronavirus/Oil Price War Crisis
BlackRock stock declined by about 9% between 8th March 2020 and 1st April 2020 and the stock is down by about 22% since February 1, after the WHO declared a global health emergency.
BLK 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 17% between March 8 and April 1, 2020 and it has fallen by 26% 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)
BlackRock Stock Performance Over 2007-08 Financial Crisis
BLK stock declined from levels of around $128 in October 2007 (the pre-crisis peak) to $72 in March 2009 (as the markets bottomed out) and recovered to levels of about $176 in early 2010.Through the crisis, BLK stock declined over 44% from its approximate pre-crisis peak. This marked a narrower decline than the broader S&P, which fell by as much as 51%.BlackRock stock saw substantial recovery from the lows, rising by over 145% between March 2009 and January 2010. However, this recovery was not completely organic, as BlackRock's acquisition of iShares in 2009 gave a big boost to its stock.In Comparison, the growth was much higher than the S&P, which rose by about 48% over the same period.
BLK Stock: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
BLK Stock: Cumulative % Change from 10/1/2007
S&P 500 Performance Over The 2007-08 Financial Crisis
The 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 BlackRock in fact stay solvent through the Coronavirus crisis?
Are cash from operations going to cover for interest expense and investments needed?
BLK Interest Expense
BLK Cash from Investments (-ve is Cash Used)
BLK Cash from operations
Conclusion
While BlackRock 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 30% as the crisis winds down and the stock recovers back to pre-coronavirus levels.