Global lockdowns have been miserable for most, but there are plenty of sectors who have thrived. Tech stocks are one of them.
As restrictions continue in most countries around the globe, including Australia, many cyclical businesses are still feeling the full force of the global pandemic. Not only are some borders still shut, but many industries have been ravaged.
Despite this, there are a few well-positioned companies that have not only benefited from the pandemic, but have actually thrived. One industry in particular is tech. Especially tech companies that have supported the transition to working from home (WFH) or remotely. Tech offerings that have provided entertainment and communication tools for isolated individuals have also fared well.
Before the pandemic began, many tech and software companies were already soaring to success. The pandemic sent these companies and their associated stocks into overdrive in 2020. In fact, most tech stocks nearly double, tripled or in some cases even quadrupled, in popularity.
Which companies are leading the WFH charge?
Zoom Video Communications
The first name that comes to mind when it comes to remote work practices is Zoom. While Zoom has been around for both business and personal communication for some time now, it really climbed its way to fame in 2020.
Experiencing a huge increase in new users, Zoom currently has over 500,000 companies that have more than ten employees using the platform. That’s up 650 per cent from their 66,300 customer base in September 2019.
Peloton Interactive Inc
When lockdowns forced people to WFH, many gyms and physical workout studios including yoga, Pilates and even boot camp classes were told to close their doors too. This is where companies that provide home fitness equipment or digital fitness saw their time in the sun.
Recently launched in Australia, the world’s largest cult interactive fitness platform and equipment company Peloton has made a big splash. With over 5.9 million total global users, the company experienced tremendous growth in 2020. Its share price followed suit, climbing around 400 per cent.
Atlassian Corporation Plc
With productivity one of the top concerns for employers, many businesses have made it a priority to ensure it remains high while their staff are WFH. Collaboration and remote work tools from Australia’s Atlassian (listed on NASDAQ, not ASX) have supported businesses to work and connect with one another seamlessly and smoothly. As a result, the company’s shares climbed 127 per cent in the last year and its customer base has surged.
Other tech stocks that have benefited during lockdowns
It makes sense that tech companies that have directly supported WFH during lockdowns are on the rise. But are there other tech stocks that have also benefited?
The answer is yes. Especially as workers transition back to the office, continue to work remotely for the foreseeable future, or opt for a hybrid working situation.
Huge tech corporations are behind the move to allow staff to WFH permanently. For example, Google has said it will allow around 20 per cent of its employees to work remotely indefinitely. Spotify has left it up to its 5,500 global employees to decide their own working arrangement. In turn, these decisions have made investors look favourably on these companies.
In general, the WFH move has also driven sales for personal computing products. This has impacted the already-exhausted global supply constraint of semiconductor chips, which is struggling to meet growing demand. Nvidia, the largest semiconductor manufacturer in the US, has been reaping the rewards of the rise in demand over the last 12 months with its shares climbing over 91 per cent.
Will the hype of WFH tech stocks die down?
It’s anticipated that the WFH lifestyle isn’t likely to completely disappear — especially as businesses have learnt that employees can work successfully at home. However, many companies are anticipating a natural slow down in momentum, especially as restrictions ease.
Many people are adamant that WFH is here to stay, but it can be tricky to predict market direction at any given point in time as disruptors routinely stoke volatility in several sectors.