For most of Scough's five-year history, it was a small company that made a niche product: scarves with built-in air filters that serve as a fashionable alternative to medical face masks. It mostly sold to people with compromised immune systems or those wanting to do motorcycle trips through smoggy areas. Then COVID-19 hit.
“It was just sort of this exponential growth, where it was just doubling every day until we ran out of everything, even all of our raw materials. It was just this kind of real crazy explosion and now just a cavalcade of emails every day,” founder Andrew Kessler recently told the network France24. “We’re also not really geared up for such demand.”
There is no disputing that the coronavirus is a social and economic catastrophe—as many as 47 million Americans could lose their jobs amid a crash some experts fear could rival the Great Depression. But like any crisis throughout history, some people are cashing in.
“In a nutshell, if people are able to use a company’s products or services from their home, then this is a field day for these companies,” Charles Lewis Sizemore, a Dallas-based investment advisor, told VICE over the phone from Peru, where he was stranded due to the country’s airports shutting down because of coronavirus. “Not only are those companies not affected, they actually benefit.”
What follows is a brief, non-exhaustive list of COVID-19's potential economic winners. Some of these companies were already powerful and are now becoming more so, while others, like Scough, are lucky enough to be selling the right thing during an unprecedented global pandemic—or else are poised to profit from the brutal economic fallout.
If you needed one more reason to be pissed off at Jeff Bezos, here it is: The Amazon founder is now $5.5 billion richer than he was back in January. Part of that is because Bezos sold off a bunch of Amazon stock just before markets crashed in February. His remaining shares are gaining in value as investors bet that Amazon comes out of this crisis stronger than ever, just as it did in 2008. With physical stores closed, many unlikely to ever reopen, Americans will become increasingly dependent on the e-commerce giant, which has been accused of exposing its employees to dangerous conditions during the pandemic and recently fired a warehouse employee who organized a walkout. JPMorgan has referred to Amazon, which is looking to hire 100,000 new workers, as the “primary beneficiary” from the current crisis.
Social distancing sucks, but not for Eric Yuan. Perhaps no one has personally profited from the coronavirus crisis more than the Zoom founder, whose net worth grew by $2 billion this year as quarantines and lockdowns took hold across the world, launching him into slot number 274 on the Bloomberg Billionaires Index. “Demand for Zoom’s software, which facilitates virtual conferences and web meetings, is exploding as the spreading virus is prompting office closures and meeting cancellations,” Bloomberg reported last month.
With millions of people working from home, a company that lets you sign documents without leaving your front door or having to interact with people seems poised for massive gains. “Something like DocuSign is fantastic because it allows business to go on as usual,” Sizemore said. The company’s revenue is up 38 percent since last year and may keep growing even as the pandemic wanes. “Are you going to want to go back to printing out paper and signing it and Fedexing it?” he said. “That doesn’t really make a lot of sense.”
This company falls into the “unexpected windfall” category. A year ago, Campbell Soup posted a quarterly net loss of $59 million, in part caused by the longer-term trend of people wanting to eat fresh food instead of canned meals. But with all the panic-buying, hoarding and stocking up taking place because of COVID-19, the company’s fortunes are temporarily turning around, resulting in it recently posting net income of $1.2 million in its most recent earnings report. This is probably just a one-time bump, however. “When life gets back to normal we’re not going to be eating canned goods in our houses anymore,” Sizemore said.
People are bored, anxious and stuck at home. Many of them will fill their every waking hour with video games. That’s the logic behind many investors seeing the Call of Duty and World of Warcraft game developer as a smart place to put their money, even if shares in the company are currently down. “Not only are all of the middle school and high school gamers staying home but now all of the millennials are so-called ‘working’ but probably mostly gaming from home,” investor Jake Dollarhide recently told Reuters.
Dollar General (and dollar stores more generally)
During times of economic distress, companies like Dollar General tend to do very well. The discount chain came out strong from the 2008 financial crash, and is currently hiring up to 50,000 people to meet a surge in coronavirus-related demand, some of it due to mass layoffs of restaurant, retail and other customer service workers, who now may be looking for bargains. “A lot of the people employed in all these sectors are not high-income earners,” Sizemore said. “They’re going to have cut back pretty hardcore for months.”
You could see an investment in this golf equipment maker as another bet on inequality. As the effects of social distancing and a nasty recession linger on, some wealthier people may see this as an opportunity to buy a new set of golf clubs. “If there's one sport that you can still play while practicing social distancing, it's golf,” predicted a report from Bespoke Investment Group. “Golf courses should be able to remain open in a COVID world, and a stock like Callaway Golf could be selling a lot more clubs and balls as the weather heats up and checks start showing up in the mail.”
Kimberly-Clark and Procter & Gamble
Being shut indoors with your partner or spouse for months isn’t exactly a romantic getaway, but it could lead to a lot of sex for some people, and potentially a lot of babies. That could eventually mean a booming market for diapers and baby wipes. “My guess is that by New Year's Eve 2020, the birth rate will begin to accelerate,” wrote investor Andrew Hecht. “As couples shelter in place, the birth rate could suddenly spike, causing additional demand for Kimberly-Clark and Procter & Gamble products.”
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Geoff Dembicki is the author of Are We Screwed? How a New Generation Is Fighting to Survive Climate Change. Follow him on Twitter.