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UnitedHealth Group’s (UNH) stock experienced one of its worst ever days on Thursday, after the healthcare giant unexpectedly lowered its profit projection for the year.
UnitedHealth stock dropped more than 22% Thursday, its largest daily decline since 1998. Thursday was the fourth-worst Wall Street day for UnitedHealth since 1984.
UnitedHealth’s rapid drop in stock price rippled through the market. Humana (HUM), Elevance Health and other health insurers also dropped by 7.4% and 2.44%, respectively. UnitedHealth, the most expensive stock in the Dow Jones Industrial Average price-weighted index, shaved off 789 points. The blue-chip index fell by 1.3%. If UnitedHealth’s stock had not moved, the Dow Jones Industrial Average would have gained 262 points or 0.7%.
UnitedHealth’s plunge erased $120 billion of its market cap, making it one of the worst stock crashes in history. It’s a wealth-destroying drop that’s rare outside of the tech industry, where corporate valuations can be inflated and, in times of crisis, explode. Meta (META), for example, became the first company to lose more than $100 billion in a single day in 2018 after the company—then called Facebook—reported disappointing quarterly revenue.
Companies in defensive sectors such as health care and consumer staples usually lose this much market value over a long period of slow decline. Pharmacy giant Walgreens Boots Alliance (WBA) and cosmetics giant Estée Lauder (EL), for example, have each lost about $100 billion in value over the last 10 and 3 years, respectively, as they’ve struggled with slumping sales.
To be sure, UnitedHealth, with a $535 billion market cap, was the 14th largest company in the S&P 500 heading into Thursday’s session, giving it lots of market value to lose. Only Berkshire Hathaway, Eli Lilly, Walmart (WMT), JPMorgan Chase and Visa (V), which are not in the tech sector were worth more on Thursday. Still, companies the size of UnitedHealth often run stable businesses and require a major shock, such as Covid-19, in order to experience the kind of sale seen Thursday.
