What Happened?

A number of stocks fell in the afternoon session after President Donald Trump threatened to impose 'massive' tariffs on Chinese products, reigniting trade war fears. 

In a social media post, Trump stated the move was a potential countermeasure to China 'becoming very hostile,' following Beijing's announcement of new export controls on rare-earth minerals. These minerals are critical components for magnets used across the automotive, electronics, and defense industries. The unexpected development jolted Wall Street, which had been trending higher. The news sent all major indices into negative territory, with the tech-rich Nasdaq Composite falling 1.7%, the S&P 500 dropping 1.3%, and the Dow Jones Industrial Average declining by 0.9%.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Document Management company DocuSign (NASDAQ: DOCU) fell 3.2%. Is now the time to buy DocuSign? Access our full analysis report here, it’s free for active Edge members.
• Identity Management company Okta (NASDAQ: OKTA) fell 4.5%. Is now the time to buy Okta? Access our full analysis report here, it’s free for active Edge members.
• Automation Software company Appian (NASDAQ: APPN) fell 3.6%. Is now the time to buy Appian? Access our full analysis report here, it’s free for active Edge members.
• Communications Platform company Bandwidth (NASDAQ: BAND) fell 5.6%. Is now the time to buy Bandwidth? Access our full analysis report here, it’s free for active Edge members.
• Data Analytics company Domo (NASDAQ: DOMO) fell 3.9%. Is now the time to buy Domo? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Bandwidth (BAND)

Bandwidth’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 3 days ago when the stock dropped 4.5% as tech stocks pulled back as a report raised concerns about artificial intelligence demand and profitability. 

Oracle shares lost more than 5% following news of its cloud business generating lighter margins than expected. According to internal documents cited in the report, the gross profit margin for this business was only 14%, a figure much lower than what analysts had expected. This suggested that the high costs of running the advanced chip infrastructure were weighing on profitability. Compounding these worries was the ongoing U.S. government shutdown, in its second week, with no clear resolution in sight from Washington. These updates drove investors away from riskier assets and towards safe havens, a trend highlighted by gold futures hitting a record $4,000 per ounce for the first time.

Bandwidth is down 10.1% since the beginning of the year, and at $15.03 per share, it is trading 31.2% below its 52-week high of $21.84 from November 2024. Investors who bought $1,000 worth of Bandwidth’s shares 5 years ago would now be looking at an investment worth $80.15.

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