Its been approximately 12-months since the spread of COVID turned into a pandemic and started to spread across Europe and the United States. Asian countries were already in lockdown, with Japan closing schools for the first time. The shock of the spread in the U.S. and Europe brought to the forefront several companies that benefit from people staying at home. At the forefront were the communication companies such as Zoom, Slack, and Microsoft’s teams. Searches on the internet surged higher, helping buoy Google and everyone was glued to their smartphones as TikTok became a craze helping to buoy Apple’s share price. Trading in these stocks rallied substantially, but as the vaccines started to roll out, investors had a change of heart. Here is what happened and what is likely to happen going forward.
Communication Benefits the Most
When you are stuck at home and need to work and go to school from home, your communication with others becomes essential. Nobody could have ever imagined in 2019 that the communication sector would become so crucial to most of our daily lives. The concept of virtual school was more of a fantasy than a reality in 2019, but as 2020 started, many of us had to bulk up our internet connections to make sure we could communicate with the rest of the world. Communications include video services that are used to see and talk to people over the phone. It also includes all the social media platforms.
Companies like Zoom, Microsoft and Slack, became an essential part of many of our everyday lives. If you wanted to hold a meeting and share documents or have a class in school where a teacher could provide examples, these products become necessary. Products like Whatsapp used on Facebook and Facetime used on Apple phones were ways people could keep in touch with their loved ones and friends. To speak to others, you needed to have a phone as it was not easy to contact someone working at home and did not have a mobile or smartphone.
Social Media also outperformed as the pandemic took hold. People needed to express how they felt and communicated to large groups to discuss how to purchase goods and services during the pandemic. Twitter, one of the former presidents of the United States favorite apps, was his crucial source to communicate to his constituents.
Technology shifted the way individuals were able to receive goods and services. Many people were unwilling to go to the supermarket or pick up takeout food from a restaurant during the height of the pandemic. Without the ability to use technology to get these goods, people would not be able to shelter in place. Companies like Uber and Doordash could capitalize and use their technology to generate profits during these challenging times. New private companies like “Instacart” allowed many people to shop for groceries while at home. The digitization of the world happened in a brief period enabling many companies to blossom.
The Bottom Line
The upshot is that many companies saw their stock prices rise substantially as the pandemic took hold. The Communications and Technology sectors were the best performers, gaining traction as the economy’s digitization accelerated. Even with the vaccine rollout and the movement back to normal, many of these companies will continue to provide necessary tools that will allow them to be profitable in the future.
Images from Pixabay.