The U.S. blacklisted 28 Chinese organizations on Monday evening due to concerns about human rights violations, and China indicated that a retaliation may be coming while denying human rights abuses. This escalation of the trade war between the two countries did not sit well with the stock market on Tuesday.

Index Change at 2:15 p.m.
Dow Jones Industrial Average (DJINDICES:^DJI) (0.57%)
S&P 500 (SNPINDEX:^GSPC) (0.89%)
Nasdaq Composite (NASDAQINDEX:^IXIC) (0.94%)

Data source: Yahoo! Finance.

Plenty of stocks were down by Tuesday afternoon, but Zoom Video Communications (NASDAQ:ZM) and GameStop (NYSE:GME) fell into an even deeper slump than the market. Here's what happened.

Zoom hit by Facebook Portal news

Teleconferencing software provider Zoom already faces plenty of competition from larger tech companies -- Cisco's Webex and Microsoft's Skype are two prominent examples. But the landscape became even more competitive on Tuesday following Facebook's (NASDAQ:FB) announcement that its Workplace collaboration service was coming to its Portal devices.

Shares of Zoom were down 3.5% at 2:15 p.m. EDT Tuesday.

Facebook's Workplace already supports video calls on smartphones and PCs, but the social media giant is now bringing support to its Portal displays. Portal has not been a particularly successful product -- IDC estimates that Facebook has shipped around 54,000 devices since it launched. Facebook may find more success among business users that already use its Workplace service.

A sign at Facebook's headquarters.

Image source: Facebook.

Facebook's video conferencing efforts may not impact Zoom at all, given the popularity of the company's products. Zoom's revenue is still nearly doubling on a year-over-year basis, driven both by new customers and by additional revenue from existing customers. A little more competition likely won't matter much.

But with shares of Zoom priced for something close to perfection, any bad news is liable to hit the stock. Zoom is valued at over $20 billion, good for a price-to-sales ratio of nearly 45. The company is profitable, but the price-to-earnings ratio is deep into the hundreds. This is a very expensive stock, and expectations are astronomically high. That's a recipe for volatility and the occasional painful sell-off.

GameStop down as PlayStation 5 details emerge

Video game retailer GameStop is betting that the next generation of game consoles will juice its sales. The tail-end of a console generation has never been a great time for GameStop, and this time around the company is facing additional pressure from digital downloads and streaming services.

Strangely enough, shares of GameStop were down sharply on Tuesday after Sony confirmed some details about its upcoming PlayStation 5 console. The holiday 2020 launch date wasn't a surprise, but by 2:15 p.m. EDT investors had pushed GameStop stock down 4.5% anyway.

The PlayStation 5 will still support physical game discs, so GameStop's core product won't be completely obsolete just yet. But game installation will be mandatory this time around, because the console's solid-state drive will be much faster that the optical drive. The disc version of a game won't yield any storage savings, although it will still save the user from a large download.

While Sony is still supporting discs, it's also doubling down on digital. The company slashed the price of its PlayStation Now service earlier this month to $60 annually, or $10 per month, and it added big-name titles like Grand Theft Auto V and Uncharted 4 for a limited time. PlayStation Now supports streaming of more than 800 last-gen and current-gen games, as well as downloads of certain PS4 titles.

With GameStop's core business facing an existential crisis, a new console generation may not be enough to save the company.