March 17, 2020
Wedbush Securities media analyst Michael Pachter has compiled a list of publicly traded companies he says are good bets (for investing in) during the ongoing coronavirus pandemic. With people encouraged to stay indoors in their homes and avoid large gatherings, companies catering towards consumers confined indoors are gaining traction with investors.
“We view Amazon as uniquely-positioned to gain meaningful market share across a number of verticals in a multitude of countries driven by coronavirus-related changes in consumer behavior,” Pachter wrote in a March 17 note.
Beyond its market-leader status in ecommerce, Amazon’s Prime Video streaming video service, Prime Channels (third-party SVOD platforms), Instant Video (transactional VOD) and packaged media offer a cross-platform variety of home entertainment options.
With consumers in the near term appearing to spend more time and money shopping online to avoid crowds, limit time wasted searching for products sold-out at brick-and-mortar outlets, and, in some situations, to adhere to the rules implemented by different governmental bodies, Pachter contends companies like Amazon and Facebook are well-positioned to deal with the situation.
Indeed, despite Amazon disclosing delivery delays last weekend due to the consumer crush for select items (i.e. toilet paper), Pachter says this amounts to a “high-class” problem only.
“We expect Amazon to absorb the learnings from this difficult period and adapt its supply chain and delivery network best practices accordingly,” Pachter wrote. “In addition, we expect consumers’ increasing reliance on the company at present to result in the acceleration of market share capture that should benefit Amazon and its investors for the next several years.”
The analyst believes Facebook has likely seen significant upticks in user engagement and hence ad impression growth across multiple properties driven by coronavirus fears. Given the seemingly unprecedented and unrelenting volume of news related to the global pandemic, the reliance that a large percentage of the world’s population has on Facebook as its primary source of information, and an increasingly-pervasive stay-at-home attitude accentuated in some instances by the government, “we believe that many Facebook users have been accessing its properties at meaningfully elevated levels over the last several weeks.”
Pachter expects the “positive” momentum for Facebook to continue through the remainder of the first quarter in many of Facebook’s most important geographies.
“When factoring in these recent trends, the company’s high-level Q1 top-line growth guidance and consensus expectations for the fiscal year appear overly conservative,” he wrote.