Which companies performed best during the pandemic? … Amazon to Tesla, Pinduoduo to Shopify … tech-based companies thrived, as the rest of the world stopped working
August 1, 2020
It was not a time for focusing on profits. It was a time for looking after people. As the Covid-19 pandemic swept across the world, locking down cities and nations, economies quickly felt one of the most dramatic shocks of recent times, and its far from over. Many jumped to protect employees, and then using their assets to support society. Louis Vuitton’s perfume gave way to hand sanitiser, Burberry’s production lines converted to protective clothing.
Yet at the same time, other companies thrived. Pharma companies quickly swung into the search for vaccines, while technology companies ramped up their support to home workers, home educators, and remote living. Online retailers too quickly became essential parts of our lives, as we switched to digital lives, unlikely to return to old behaviours. Eric Yuan’s Zoom online platform became a favourite, while new entrants like China’s Pinduoduo turbo boosted their growth.
So who did best?
A recent analysis of 6 month (Jan to June 2020) growth in market capitalisation, by Financial Times, reveals some obvious but also interesting insights. Not least is the staggering growth of the leading companies:
1. Amazon. Market cap added = $401.1bn
Amazon anticipates it could spend $4bn to keep its logistics running during the coronavirus crisis.
As world leaders ordered their citizens indoors, Amazon became the emergency port of call for those desperate to stock up on vital household goods — a rush that led the company to temporarily shut its warehouses to “non-essential” products. Record revenues followed, but also soaring costs. Chief executive Jeff Bezos warned as much as $4bn could be spent on virus mitigation, such as testing labs and thermal cameras — potentially pushing Amazon into its first quarterly loss since 2015. Still, the accelerated shift to online shopping and the increased importance of its cloud computing business in the remote work era drove Amazon’s stock to all-time highs.
2. Microsoft. Market cap added = $269.9bn
75m people used the Teams communication app in a single day in April, up from 20m in late 2019.
Microsoft’s shift to the cloud under Satya Nadella has left it well-placed for a world where large numbers of people are working remotely. The Teams communication app has become a way for workers to stay in touch. The Azure cloud computing platform has become a more critical part of the digital backbone for many companies. Microsoft even has a way to satisfy the personal: a record 90m players turned to the Xbox Live gaming service in April.
3. Apple. Market cap added = $219.1bn
The iPhone maker managed to rake in $58.3bn in revenue in the March quarter, despite closing all of its retail stores.
While all of Apple’s 500 stores around the world were forced to close, revenues in the opening quarter were resilient thanks to robust online sales. Apple managed to release a new iPhone, iMac and MacBook Air, drawing more users into an ever-expanding ecosystem of wearables and services. Apple executives predicted sales of some items would even accelerate, as millions of consumers working from home would opt to upgrade their electronics. Investors crowned Apple the first $1.5tn company.
4. Tesla. Market cap added = $108.4bn
402 miles: the range of Tesla’s latest Model S, underscoring its technological lead.
The clear technology leader for battery-powered cars, Tesla is outpacing legacy competitors as they struggle to retool factories and perfect software. Meanwhile, chief executive Elon Musk is promising to upend the entire model of car ownership with fleets of self-driving robotaxis that would charge by the mile. Still, even Mr Musk said on Twitter, on May 1, that the “Tesla stock price is too high”. Since then it has climbed even higher.
5. Tencent. Market cap added = $93bn
Online gaming revenues rose 31 per cent in the first quarter.
Chinese people isolated at home turned to Tencent’s virtual worlds. In its hit games such as Honor of Kings, users shelled out for new weapons and outfits. Tencent’s video subscriber numbers swelled to 112m, its music streamers jumped to 43m and monthly users of its social media app WeChat — indispensable for buying noodles and verifying users’ health during the coronavirus period — hit 1.2bn. In a global spending spree, Tencent has exploited falling valuations: it recently acquired Norwegian game developer Funcom, took a stake in German developer Yager, and poured capital into an array of fintech start-ups.
6. Facebook. Market cap added = $85.7bn
39 per cent — the rise in advertising impressions at Facebook in the first quarter of the year.
Knocks to Facebook’s advertising business during the pandemic have been offset by its 2.6bn entertainment-starved users spending more time on the platform. Small business advertisers slashed their marketing budgets. But Facebook’s engagement levels exploded, increasing its advertising impressions. The company has launched new video chat and livestream features, as well as an ecommerce play to rival Amazon, known as Facebook Shops. However, its content moderation capabilities have been stretched by coronavirus-related misinformation and conspiracy theories. Chief executive Mark Zuckerberg has come under fire from employees for failing to flag incendiary or misleading statements from US President Donald Trump.
7. Nvidia. Market cap added = $83.3bn
Hours spent playing games on Nvidia’s platforms jumped 50 per cent during lockdowns.
Nvidia’s graphics chips have become a mainstay of gaming machines and machine learning systems, insulating the company from the worst of the downturn. Sales of gaming chips were dented by the closure of internet cafés in China, while the automotive industry, a big customer, has experienced a collapse in sales. But Nvidia’s business has been helped by the growing importance of ecommerce in selling new graphics cards, along with a shift towards online gaming. It has also been riding a boom in demand for data centre chips from big internet companies, as AI becomes a more important component of their services and overall digital activity jumps.
8. Alphabet. Market cap added = $68.1bn
Even as advertising collapsed at the end of March, YouTube’s revenue was still growing nearly 10 per cent.
Given that online advertising went into sharp decline as the crisis unfolded, early signs suggest Alphabet has shown surprising resilience. Sectors such as travel and local services may have dried up, but in other areas Google — which supplies virtually all Alphabet’s revenue — has reported that demand is holding up better than expected. Search advertising appeared to stabilise early in the crisis, after touching bottom in late March. The Google cloud computing platform, Meet video app and Play app store have benefited from the shift of work and entertainment online.
9. PayPal. Market cap added = $65.4bn
7.4m — net new users in April.
The pioneer of online payments has found increased relevance in the real-world pandemic, rolling out new capabilities for merchants to handle contactless payments in physical stores. PayPal facilitated the transfer of more than $1bn in federal loans as part of the US Small Business Administration’s Paycheck Protection Program. Its money transfer app Venmo was popular, pre-coronavirus, for friends settling dinner bills. Now, the company says, it is witnessing larger, cross-generational transfers — such as socially-distanced withdrawals from the Bank of Mum and Dad — and increased usage for paying for goods and services that might otherwise have been paid for with cash.
10. T-Mobile. Market cap added = $59.7bn
T-Mobile added 452,000 postpaid phone subscribers in the first quarter.
The US wireless company benefited from the twin forces of lockdowns, which made people more dependent on their phones for connection, and the closing of its long-awaited merger with rival Sprint. The deal made T-Mobile the third-largest player in the US telecoms market, trailing AT&T and Verizon, and is expected to give the big phone companies more pricing power.
11. Pinduoduo. Market cap added = $55.2bn
Shoppers on its platform increased to 628m.
The ecommerce group benefited as hundreds of millions of Chinese turned to shopping from their smartphones rather than going to malls. As demand rose for its ultra-cheap goods, the total value of transactions over its platform soared and revenues were up 44 per cent in the first quarter. Its annual shopper count is fast approaching the 726m who shop with its chief rival Alibaba.
12. Netflix. Market cap added = $55.1bn
183m global subscribers by the end of Q1, a 23 per cent jump from a year earlier.
Netflix added twice as many subscribers as it had forecast in the first three months of the year, as the largest paid streaming service entertained global lockdown audiences with shows such as Tiger King, La Casa de Papel and Love is Blind. The biggest boost came from Europe, the Middle East and Africa, where it signed up nearly 7m subscribers in the first quarter. The company is enjoying a “perfect storm”, said Michael Nathanson, analyst at MoffettNathanson. “The longer the current situation lasts, the bigger the benefit to Netflix.”
13. Meituan Dianping. Market cap added = $53.6bn
Food delivery orders had bounced back to 90 per cent of their pre-pandemic level by mid-May.
China’s “everything app” was hit hard by the country’s lockdown, which closed many of the restaurants it partnered with to deliver meals — its largest chunk of business — as it swung to a loss in the first quarter. But by May, executives were upbeat as food delivery and travel booking recovered. Analysts said that high-end restaurants, which were afraid of “cannibalisation” and “bad user experience”, had no choice but to turn to the platform for deliveries. Its average ticket price climbed 14 per cent in the first quarter and many riders began delivering to set spots in apartment buildings, saving them time and improving their efficiency.
14. Shopify. Market cap added = $51.4bn
62 per cent more new Shopify stores were created from March 13 to April 24 than the previous six weeks as locked-down retailers rushed online.
Canadian company Shopify overtook eBay to become the second-biggest ecommerce group after Amazon by US market share last year, processing $61bn worth of merchandise globally. The pandemic accelerated shopping’s shift online, with Shopify among the prime beneficiaries — doubling its valuation since the start of 2020. Start-ups such as Allbirds shoes and global groups including Heinz are among hundreds of thousands of brands using its software and services to sell directly to customers — cutting out middlemen such as Amazon.
15. Zoom Video. Market cap added = $47.9bn
Zoom video calls reached 300m participants a day in April.
The video conferencing company has come to symbolise the work-from-home boom of 2020, making its fake digital backdrops a cultural touchstone of the coronavirus crisis. Opening its business-focused app to a wide group of non-paying consumers and educational institutions brought challenges, but also helped turn Zoom into a household name. Wider usage brought attention to its security lapses and while some prominent companies warned their staff not to use it, the controversy did little to hurt business. By the end of April, the number of medium and larger companies using Zoom was up more than three-fold from a year before, while revenue soared 169 per cent.
Others, further down the top 100 list, include:
19. AbbVie. Market cap added = $37.7bn
Received approval for its $63bn deal for Allergan, the maker of Botox.
20. Kweichow Moutai. Market cap added = $35.5bn
Maker of China’s best-known distilled spirit, with profit margin above 90%.
22. Alibaba Group. Market cap added = $32.8bn
Alibaba’s cloud unit grew 57%, but sales stagnated for Tmall and Taobao marketplaces
26. Roche. Market cap added = $27.1bn
One of the diagnostics “Big 4”, has benefited from antibody tests for coronavirus
32. Novo Nordisk. Market cap added = $19.8bn
Net profit in the first quarter was $1.74bn. One of the world’s largest insulin producers.
37. Mercado Libre. Market cap added = $18bn
Sales on the Latin American ecommerce platform surged 76% in April.
51. Nestlé. Market cap added = $14.2bn
Nestlé’s petcare division boasted 13.9 per cent organic growth in the first quarter.
75. Hermès. Market cap added = $10.6bn
$2.7m of sales were made in a single day at a Hermès store in Guangzhou when it reopened
77. Spotify. Market cap added = $10.3bn
130m global subscribers by the end of Q1, up 31 per cent from a year ago.
85. TAL Education. Market cap added = $9.4bn
4.6m students were signed up in February, a 57 per cent year-on-year rise.
92. Just Eat Takeaway. Market cap added = $8.9bn
Having merged with rival Takeaway, it will now pay $7.3bn buy US rival Grubhub
95. L’Oréal. Market cap added = $8.7bn
The world’s biggest cosmetics company saw online sales jump 53% in the first quarter.
96. Snap. Market cap added = $8.6bn
Source: Financial Times