In the wreckage of the coronavirus-induced bear market, there's a principle developing with internet stocks: Consider buying the stocks of companies that you use every day as you work from home.
Amazon's total business is still heavily weighted toward e-commerce, a service consumers are desperate for, as they limit amount of time spent outside.
Netflix viewing is an at-home experience, as is Spotify listening, making these two stocks at lease immune to the virus.
Annie Gaus, TheStreet's senior tech reporter said:
"The main thrust of the RBC [Capital Markets] analysis is that the stocks that you mentioned, maybe the ones that are least likely to be impacted negatively during this pandemic that we're experiencing right now as well as throughout any recession or economic disruptions more broadly that result from it. So in the case of Amazon, the reasoning is somewhat obvious right now. There was a huge spike in demand for Amazon's delivery services. And you know, I would note that others have, other analysts have said that Amazon may actually benefit from this crisis that's underway right now. As far as the other, I think the main thrust is that a lot more people are going to be staying home and some of those internet stocks that we're discussing could at least be insulated from any damaging effects."
But will Netflix and Spotify see increased subscribers? They can't monetize engagement. Here's what Gaus said:
RBC didn't revise their subscription estimates upwards, at least at this point. But again, I would note that others have said, 'Hey, you know, a lot more people are not going to be watching live sports are going to be at home. They're going to be looking for stuff to do.' So, that could result in more people signing up for these services."
See Gaus' piece here: Best and Worst Internet Stock Plays During the Coronavirus Outbreak
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