The coronavirus pandemic and associated lockdowns have defined global share markets over the course of 2020. Apart from the nasty share market crash that March brought, 2020 has mostly been about a 'decoupling game' – finding the stock winners of this new paradigm as well as ditching the losers. It's true that crises like the one we're going through tend to accelerate change. Things had been moving towards cashless payments, online shopping and video streaming for years now. But 2020 has seen these trends become ever more pronounced. And investors are reacting accordingly.
So where to look for the stock winners of 2020? Well, the Australian Financial Review (AFR) has done some reporting on the biggest global winners and losers from the lockdowns, and it makes for some interesting reading.
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Global stock winners from the lockdowns
In its report, the AFR names the following shares as winners from the global pandemic and associated lockdowns:
- Amazon.com Inc. (NASDAQ: AMZN)
- Netflix Inc (NASDAQ: NFLX)
- Snap Inc (NYSE: SNAP)
- Facebook Inc. (NASDAQ: FB)
- YouTube, a subsidiary of Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
- Pinterest Inc (NYSE: PINS)
- Dow Jones & Company, a subsidiary of News Corporation (ASX: NWS)
The AFR also names the shares that it views as being the biggest losers of the pandemic:
- HBO, a subsidiary of AT&T Inc. (NYSE: T)
- News Corporation and other media publishers
- Alphabet's Google services
- Spotify Technology SA (NYSE: SPOT)
- Twitter Inc (NYSE: TWTR)
- Verizon Communications Inc. (NYSE: VZ)
-
iHeartMedia Inc (NASDAQ: IHRT)
As is evident, this is a pretty mixed bag of winners and losers, sometimes overlapping. So what can ASX investors take form this? Well, I think one of the most striking themes is that a rising tide isn't lifting all boats. Many social media companies are doing well in these tough times (e.g. Snap and Facebook), while others (Twitter), not so much.
The AFR reports that revenue from Alphabet's YouTube division is growing revenues at a rate of 6% year on year, while revenue from its larger Google search division was down 10% over the same period.
We also see the fortunes of Netflix and Spotify diverging. Both offer subscription services for entertainment that you would think would be in high demand during a lockdown. Yet Netflix's revenue is reportedly up 25% year on year, while Spotify saw a 21% drop in advertising revenue.
Foolish takeaway
I think these observations prove nicely that it takes more than a presence in a 'growing industry' to be a real winner in the Brave New World we are all living and investing in today.
