Why These Stocks—& Others Like Them—Are Best Suited to Profit From Coronavirus
Netflix Stock & Zoom Video Stock Rise as Coronavirus Fears Mount
The novel coronavirus (COVID-19) has created what I like to call a bevy of “coronavirus stocks.” These are stocks that are likely to see a boost rather than a drop as a result of the virus’s spread.
One such company is Netflix Inc (NASDAQ:NFLX). Netflix stock soared by over five percent on March 10 and I believe that more growth is on the way.
The reason for NFLX stock’s success is rather simple: the coronavirus is encouraging more and more people to stay in. With fears mounting over just how communicable COVID-19 is, many people are opting to spend less time out in public.
Classes at universities like Columbia have been cancelled in favor of online lectures. Some high schools and elementary schools are taking similar precautions.
The result? We’re going to see a lot more people staying home in the coming months if the fears around the virus continue to build. And that is going to create a number coronavirus stocks.
Netflix is likely going to be a huge resource for people looking to kill time as they avoid activities like going to the gym, playing sports, or going to bars.
Of course, not everyone is letting the fear of the coronavirus prevent them from leaving their home, but a fair number of folks are eschewing certain activities in the name of safety.
We’ve also seen companies like Zoom Video Communications Inc (NASDAQ:ZM) see significant gains due to concerns about COVID-19 motivating people to choose video conferencing rather than meeting face-to-face.
Zoom Video stock has risen as more people turn to the company’s remote conferencing tools to mitigate the risk of contracting the coronavirus.
“In the last 30 days alone, average daily downloads are up 90% versus the prior 30-day period, with greater user engagement as evidenced by a 17% increase in user session per day and a 3% increase in average session length,” wrote Alliancebernstein Holding LP (NYSE:AB) analyst Zane Chrane. (Source: “Zoom Video Is Seeing a Surge in Downloads Amid Coronavirus Panic, Analyst Says,” MarketWatch, February 26, 2020.)
So, even though Zoom Video does not directly deal with COVID-19, it could benefit from its spread.
And ZM stock will not be alone; many other stocks will see gains if quarantines and travel bans become the norm rather than the exception as the world attempts to contain the virus.
The end result is that a new subset of coronavirus stocks are going to be boosted if the virus continues to cause panic and force people inside.
The New Coronavirus Stocks
I’ve written elsewhere about the companies that are actively trying to treat or vaccinate against COVID-19, but this other crop of coronavirus stocks are instead focused on providing alternatives to activities that could propagate the disease.
Watching Netflix, talking on the phone, and playing video games are all substitutes to in-person meetings and events that could lead to a spike in infections as the coronavirus continues to wreak havoc.
Aside from Netflix stock and Zoom Video stock, I anticipate that we’ll see video game stocks begin to gain steam.
Furthermore, companies that operate in a similar manner to Zoom Video Communications—providing alternative ways to conduct business meetings or conferences—will probably see a rise in their usage rates.
The long and short of it is that many companies are going to profit from the coronavirus even if the broader market takes a dive as certain industries—such as airliners, cruise lines, and hotels—see massive falls.
The list of coronavirus stocks is growing, with Netflix stock being a recent addition. I anticipate that, as time goes on, we’re going to see more digital stocks—especially those of companies that provide alternatives to activities normally done out in public—rise in value.
The fact is that the coronavirus isn’t only going to wreck the stock market. It may very well help elevate certain stocks while damaging others, depending on the industry.
Companies focused on digital tech, like Netflix Inc and Zoom Video Communications Inc, are likely to see a weaker negative (or even a positive) affect of the coronavirus.
As such, investors might want to focus on these types of stocks as the rest of the stock market slows.