Stocks from all over the world have turned negative as the COVID-19 virus spreads. Crude oil prices have witnessed an implosion as well, plunging to their lowest levels since 1999. On April 20, the market had a historic route, with the May US oil deliveries trading at negative prices. The demand for oil has evaporated amidst pandemic-induced shutdowns and a raging tiff amongst major producers.
Analysts at Wall Street have rushed in to name a basket of stocks that could benefit from the Coronavirus outbreak. Aptly christened the “stay at home” basket of stocks, businesses such as Slack Technologies, Peloton Interactive, Facebook, and Google are well-positioned for buyer stock buybacks and opportunistic acquisitions. Traders are also receiving buy Amazon shares signals, as the business gets ready to announce its first-quarter financial earnings.
The ongoing Coronavirus pandemic has now infected over 2.3 million people worldwide and caused 158,600 deaths. The US is currently the most affected nation on earth with mortality rates of over 50,000 and 726,000 infections.
The pandemic is not just a health issue but a massive economic one. Finance ministers and their departments from just about every nation on earth are setting up rescue packages to prop up economies and businesses shuttered by the outbreak’s impact.
The Thriving “Stay At Home” Stocks
Amongst the list of “stay at home” stocks, there are businesses that are thriving while others are suffering or surviving. Most of these businesses are nonetheless cash-rich and will weather the billions in dollars’ worth of economic damages that the pandemic has caused.
However, the ‘thrivers’ are few and far in between and include e-commerce big wigs like Amazon.com Inc., JD.com Inc. and Walmart Inc. Telecom companies and their products have also had a surge in demand, as data becomes the lifeblood of the economy. Most of these businesses are doing all they can to manage a new world of enforced home learning, teleworking, entertainment, and social time via apps such as FaceTime.
Food delivery services such as Postmates Inc. and Door Dash have also become that rare bright spot in a gloomy business environment. Amazon, in particular, has had a great run during this period.
Supply chains are very crucial in times of war and businesses that have established robust relationships with reliable suppliers will prosper in such situations. Those that rely on volunteers, freelancers, or contractors suffer the most during periods of uncertainties. Leadership is also crucial for business survival in times of disaster. Amazon’s decisive leadership has, for instance, led to the hiring of 100,000 workers in March as other businesses lay off their employees.
Amazon Shares Are Their Peak
The business also limited the influx of any non-essential products to its warehouses. This mode of operation has turned around the business’s fortunes and cut down its burn rate in a dramatic fashion.
Consequently, the Amazon share prices have risen by 1.4 percent to $2,407. The e-commerce shop has reaped from the ongoing stay at home orders that have turned consumers to regular online shopping for essentials such as household and food products. Morgan Stanley has said that the Amazon stock has exceeded its price target of $2,400 and is now off their Fresh Money record.
There is a lot of optimism around Amazon stocks on Wall Street because of the expectation that the business’s core services will emerge stronger than ever before from this pandemic. Amazon has an e-commerce and cloud-computing wing, two core lines of business that are proving indispensable in this era. The online shopping giant is announcing its March quarter financial results on April 30, and some skeptics warn that the picture could be less rosy than it looks now.
The business has also had its fair share of losses as digital advertising demands plummet. It is estimated that e-commerce magnate’s ad segment growth will decrease by 28 percent this year. Some business analysts like James Lee of Mizuho Securities have lowered their price targets for Amazon shares to $2,300 in the expectation that the online business’s balance sheets will also take a considerable hit from the ongoing pandemic.
On the receiving end of this pandemic has been once vibrant stock markets assets like Uber Technologies Inc. and Lyft Inc. Businesses that have thrived on the sharing economy model of business have taken a thorough beating as people cut down on travel and observe social distancing.
Firms like Airbnb Inc. that do not have the advantages of strong cash positions or other thriving sectors such as Uber Eats for Uber are in a nightmare scenario. Tech travel businesses such as Expedia Group Inc., Booking Holdings Inc., and OpenTable are also in the dumps.