The Coronavirus Shutdown Hurts Many Companies, But Many Others Flourished
By: McKenna Eales
The Coronavirus pandemic affected most people all over the world. When the United States went into lockdown in March many people were experiencing things in a very new way whether it be having to do school or work virtually, no longer having a job, or being quarantined because of having Covid-19 or symptoms of it. When people think of the Coronavirus and the shutdown it caused, many people are filled with negative thoughts or feelings, but the shutdown actually had many positive outcomes too. The Covid-19 shutdown affected many people and companies negatively, but many companies actually began to prosper.
Here is a helpful link to an infographic that I will be addressing in the upcoming paragraphs: https://www.visualcapitalist.com/covid-19-downturn-beach-stocks/
The Coronavirus pandemic hit the travel and entertainment industries, also known as BEACH stocks, the hardest. Some of the largest beach stocks have seen more than $332 billion total evaporate in the past month alone.
Airlines were affected greatly by the pandemic. Market Capitalization is the market value of a publicly traded company's outstanding shares. On February 19, 2020 to market capitalization of Delta Air Lines was at $37.5 billion and by March 24, 2020 the market capitalization was $17.8 billion dollars, which is a -52% change. United Airlines had a market capitalization of $19.7 billion on February 19, 2020 but by March 24, 2020 had a market capitalization of $8.4 billion, a -57% change.
Entertainment industries struggled greatly too. Six Flags had a market capitalization of $3.2 billion on February 19, but on March 24, the market capitalization was $1.1 billion a -66% change. On the 19th of February, The Walt Disney Co. had a market capitalization of $255.1 billion and by the 24th of March it was down to $177 billion, a -31% change.
Market capitalization is a way of measuring the size of a company. Losing market capitalization not only affects the company negatively, but also the shareholders. Shareholders are negatively affected by losing market capitalization in a process called dilution. Dilution results in a decrease of an existing stockholder’s ownership percentage of a company.
Although many companies, especially companies in the BEACH stocks as I mentioned previously, were greatly hurt by the Covid-19 shutdown, many companies improved greatly. Big tech companies and retailers offering online shopping flourished.
Amazon had a 70% increase in profits in the first nine months of the years. The added $401.1 billion to their market capitalization. Microsoft's new communication app, Microsoft Teams became a new popular way to keep in touch. One day in April of 2020 there were 75 million people who used Teams, which is up 55 million people from late 2019. Microsoft added $269.9 billion to their market capitalization.
Apple and Tesla are just two more of the many companies that ended up doing very well from the pandemic. Apple was forced to close all of their 500 stores around the world, their revenues from the opening quarter were strong due to their vigorous online sales. Apple was able to add $219.1 to their market capitalization. Tesla outpace their competitors. As their competitors struggled to rebuild their companies and improve their software, Elon Musk was promising to upend the entire model of car ownership with fleets of self-driving robotaxis that would charge by the mile. Tesla was able to add $108.4 billion to their market capitalization.
In conclusion, while many companies were on their way to rock bottom, many other companies were rising to the top.
Works Cited
Eavis, Peter, and Niraj Chokshi. “While the Pandemic Wrecked Some Businesses, Others Did Fine. Even Great.” The New York Times, The New York Times, 9 Nov. 2020, www.nytimes.com/2020/11/09/business/economy/companies-profits-losses-coronavirus.html.
Neufeld, Dorothy. “The Hardest Hit Companies of the COVID-19 Downturn: The 'BEACH' Stocks.” Visual Capitalist, 25 Mar. 2020, www.visualcapitalist.com/covid-19-downturn-beach-stocks/.
“Prospering in the Pandemic: the Top 100 Companies.” Financial Times, 19 June 2020, www.ft.com/content/844ed28c-8074-4856-bde0-20f3bf4cd8f0.
Very nice article! It's really weird to think that despite a global pandemic breaking out and causing havoc for most businesses, a few did flourish. I work at a hardware store and during the first 4 months of the pandemic were absolutely nuts and the busiest we have ever been. All of our monthly ATB percentages went from being always below 4% skyrocketed to about 11% or more-- which is a lot for average ATB transactions. On a different note, do you think these businesses are still high on the profit margin despite most businesses reopening or different protocols? Or even some businesses still hurting despite these protocols being in place that are meant to help businesses open? I personally think, smaller businesses are still struggling even though we've gotten a relatively "good grip" on safety measures within businesses (not in general). However, some small businesses in certain areas are doing well because people have begun to shop locally instead of going out to congested stores-- so I think location affects this aspect. Overall, this was a well thought out post and I liked how you brought up companies like apple for technology, then tesla for cars and different areas of businesses that have all been affected differently to get an understanding of what it may have been like for each one.
ReplyDeleteI was very interested in the losses and gains of market capitalism regarding different companies. It makes sense that many of the companies that were hit so hard were from the entertainment and travel industries while companies centered around technology and innovation flourished. Your statistics really proved your point and it must be noted that so many of the companies that flourished through the lock downs gained significantly more than the losses of the companies that decreased their market capitalization (ex; Amazon experienced a 70% increase in profits while others saw anywhere from 32-66% decrease). Not only were the companies affected in some way, but direct shareholders experienced some change one way or another with dilution, which was a new concept to me. I wonder what the world will look like post-pandemic because it seems like many consumers are wanting certain elements of pre-covid back (like in person concerts, business meetings, etc) while others are immersing themselves in the virtual aspect of things.
ReplyDeleteI think it’s so interesting that tech and retail stocks have been doing that well right now. Apple’s growth especially surprises me because they had to close most, if not all, of their stores. I would have expected many of those companies to be on the decline like most in America right now. I also didn’t expect the airline industry to be down as much as it was. Decreasing by 52% over the span of a month shows a really sharp decline and reading those numbers really put it into perspective. Hopefully those companies that have low Market Capitalization are able to bring it back up once the pandemic’s influence lessens.
ReplyDeleteI found it interesting that Tesla mad out well during the pandemic. Tesla is a car company and because of the pandemic it would seem to me that there would be less car sales. Even it was surprising that you mentioned robo taxis which I didn’t know tesla released them yet. I wonder if people that still had their job wanted an electric car because cars were kind of starting to slow down production to make medical supplies to fight the pandemic. I was still shocked that Disney dropped so much especially when they have a streaming service. To me because everyone was locked up inside I would of thought that they would have gained or only lossed a little 31%.
ReplyDeleteThe Covid-19 pandemic has changed the world in so many ways, and you highlighted a lot of key information on how different companies and economic areas are affected. While you explained how the BEACH stocks were affected and gave some examples, I think it would be helpful to understand and explain why these specific stocks suffered so much. Before the pandemic and all of the shutdowns, BEACH stocks were a major part of everyday life for the entire world. People could travel, stay in hotels, and go to amusement parks or concerts; all of these activities are powered by the idea of self interest. People do things because they will gain something from it, and with the lock downs in place the world had to find alternatives. That is why the BEACH stocks suffered while others like Amazon and Apple thrived. Overall, your post was very enlightening, and I am curious as to what your perspective is on the reasoning behind the drop in certain industries.
ReplyDeleteI think it’s kind of interesting the way that covid affected certain companies. Sometimes it’s difficult to see the positive side of the lockdown and how a lot of online businesses began to boom during that time. However, the businesses that you mentioned that did gain more traffic were previously popular, multimillion dollar companies like Amazon, Apple, and Microsoft. They didn’t need the extra traffic. Even though those types of companies did “flourish” it reminds you of all the small businesses and family owned shops or restaurants that still were extremely negatively affected. In all honesty, the title of the blog excited me, but by the end I realized that I knew all along which were the companies that flourished and that the lockdown was still a tragedy for a majority of businesses in America and around the world.
ReplyDeleteI found this article extremely interesting! I feel like everyone just assumes that most if not all companies have seen a significant decline in revenue during the shut down, since everything was pretty much closed, but it makes a lot of sense why that’s not true for everyone. The companies or services that allow you to purchase things online, like Amazon would of course increase in revenue since many Americans didn’t leave their houses to shop. And let’s also not forget the stimulus checks many people got in the mail during this time. All of that extra money had to go somewhere, and for many people the money went to excess shopping or home improvement projects, etc. This boosted the sales of certain companies because people didn’t have anything better to do than those types of things. Additionally, there’s the part where the unemployment pay increased as well. Some people were receiving more money in unemployment than they did working their previous jobs. These two ways that people had more money than usual, could explain some of the rises in revenue for companies like Apple. The extra money went towards something they might not have planned on buying if they only had their average amount of money. Overall, although the BEACH companies took a large hit, it is nice to know that there are companies still out there that were still able to grow during such unprecedented times.
ReplyDeleteGreat job analyzing both the losses and gains for companies from COVID-19 pandemic. I like that you started with basic descriptions of components of the economy like market capitalization and delusion, and then described how it applied to the drop in stocks in the entertainment industry like BEACH (It’s crazy that “Delta Air Lines was at $37.5 billion and by March 24, 2020 the market capitalization was $17.8 billion dollars”). Most would assume that COVID created all negativity in the market, however, you were able to pinpoint that Apple, Amazon, and Tesla were able to benefit from COVID and create business through online shopping (and the need for technology).
ReplyDeleteThe economic effects of the pandemic have been overall detrimental, however, whenever there is a problem, no matter how bad, there is a always business that will strive. Especially on the ideas of a market economy, it enables business to strive, despite the overall economy. Just think if we were in a command economy, every single government business would hurt and shutdown. Even if the government owned amazon, there is no self-interest to make amazon better. Packages would be really delayed because customer service would not matter to the government. People would already be paying taxes on this service anyways, and they would have to pay even more for the package themselves. No one would use this service, especially in a time of a pandemic, where a lot of people don't have money to pay for this amenity service. Just be glad someone owns amazon. Its really amazing that even in this current economy, some business can strive.
ReplyDeleteBut even if some business can strive, won't they still loose money? In the short term, no. The will get a lot of money because of their unique services they offer. But in the long term, if things keep going like this. It might just end up like the command economy example. People will start loosing money because their business or employer is out of business, so they will have less overall money to spend on amazon. Amazon will then get less and less money because nobody can afford their services anymore. There is an initial flourish because (Hopefully) this is a shorter term problem that will probably go away in the next year. People still have money in the shorter term and can survive a year of quarantine, but what happens when this thing goes any longer?
I liked how you were able to see how some companies were affected in a negative way to the Coronavirus pandemic, but also mention how there were companies that the pandemic ended up helping. I thought it was interesting how I did not notice that Amazon's stock went up considering that with the pandemic many people were scared to leave there house. Considering amazon is the largest online shopping service it makes sense as to why the price of their stock flourished. One company that the pandemic affected in a positive way was Zoom. With schools switching to virtual school they needed to have a way to communicate with their students so Zoom ended up making a big profit off of the pandemic.
ReplyDeleteInteresting, I knew that companies like Zoom would flourish, but I didn't know that companies like Apple would too. It does make sense that the entertainment industry would go down, though. Even with drama, like at our school, our performance is going to have to be online, and many theaters around us are closing down since they can't have performances. It's interesting to see how companies have adapted to Covid 19. One thing that does surprise me is that a lot of digital entertainment is still being released, and many people are working from home. I wonder if working from home will continue with some occupations, or if we will go back to normal after the pandemic. I suppose we have to wait and see.
ReplyDeleteIt was interesting to see that Tesla's stock went up, despite the fact that their company is mainly based around in-person sales. Although it is understandable that companies like Walmart and Amazon were able to drastically increase their stocks, do you think that without covid-19, would companies like Amazon, Walmart, and Tesla flourish as much as they did?
ReplyDeletewhile others are immersing themselves in the virtual aspect of things.
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HONGBO
I found it very interesting how some companies had a drastic increase of their stock during Covid. I thought many companies stocks would go down drastically or increase slightly because most companies do business by in person sale. It's understandable why Amazons and Walmart stocks went up. But Apple closed their store and Tesla business in mostly in person. I wonder why they increased their stocks?
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