There aren’t many positives associated with the novel coronavirus pandemic. Besides the human toll, the pandemic and its lockdowns have slammed many sectors of the economy. Retailers and restaurants are reeling, and airlines are on life support. However, some companies in the technology sector have found that they were in the right place at the right time. The pandemic has thrust tech stocks into the spotlight, which are having an extraordinary year.
These eight tech stocks have posted big gains, with the pandemic actually boosting their business instead of hitting it.
- Zoom Video Communications Inc (NASDAQ:ZM)
- Nintendo (OTCMKTS:NTDOY)
- Logitech International SA (NASDAQ:LOGI)
- Cloudflare Inc (NYSE:NET)
- Akamai Technologies, Inc. (NASDAQ:AKAM)
- Paypal (NASDAQ:PYPL)
- DocuSign Inc (NASDAQ:DOCU)
- Etsy Inc (NASDAQ:ETSY)
Here’s why these tech companies have seen their stocks post big gains in 2020, a year when a global pandemic has disrupted markets.
Zoom Video (ZM)
Zoom Video is the poster child for pandemic success. With millions of employees suddenly finding themselves working from home and many schools scrambling to offer remote learning, video conferencing became a necessity.
There were multiple options to choose from, including established players like Microsoft’s (NASDAQ:MSFT) Skype. However, Zoom had the advantage of being easy to set up and use, and its free version was good enough for most people. There were some hiccups along the way — including security issues that led to “Zoombombing” becoming a thing — but Zoom never lost momentum.
All the popularity has paid off handsomely for investors. After its April 2019 initial public offering, ZM stock briefly topped $100, but it started 2020 below $70. With shares now trading for $276.80, Zoom stock has posted a 325% gain so far this year. All due to rapid adoption spurred by the pandemic.
Nintendo has been around for a long time, and Nintendo stock has had many highs and lows along the way. Most of that movement is tied to the life cycle of its game consoles.
However, one of the the big trends in 2020 has been a surge in the popularity of gaming. People who are self isolating need entertainment. Nintendo’s Switch portable game console was already popular, but it became virtually impossible to find during the height of the pandemic.
The game “Animal Crossing” for the Switch — non-violent, busy, and offering the ability to visit other players’ virtual islands — became known as “the Game for the Coronavirus Moment.” In a normally quiet second quarter, monstrous sales of the Switch and “Animal Crossing” resulted in a 428% year-over-year increase in operating profit for the company. NTDOY stock is up 28% so far in 2020, and 36% over the past 12 months, passing the level reached in 2018 after the Switch was first released.
Logitech is another company in the right place at the right time to capitalize on the pandemic’s work-from-home trend. The company is best known for making PC accessories including keyboard, mice, and webcams.
With the rush to videoconferencing came a surge in demand for webcams. For months, it was all but impossible to buy a Logitech webcam, at least without paying a huge markup. LOGI stock had been relatively flat over the past three years. In 2020, with demand for its webcams and other accessories hitting levels that required the company to ramp up production, LOGI shares are up 58%.
Cloudflare is a tech company that may not be known by consumers, but its services are essential for businesses and organizations that offer online access. The company routes traffic for popular websites through its own data centers for faster access and enhanced security.
Cloudflare’s IPO last September priced shares at $15, and they didn’t move a whole lot through February. However, as the pandemic spread, secure online access became more important than ever, and NET stock quickly began to make gains. At this point, Cloudflare shares are up 128% since the start of the year.
Akamai Technologies (AKAM)
Akamai Technologies, like Cloudflare, is one of the tech stocks that’s making big gains this year because of its critical position in web access. Its 300,000 servers spread across 136 countries route internet traffic for greater speed while providing security for websites.
Akamai says between 15% and 30% of the world’s total web traffic is processed by its servers. That makes it the world’s largest content delivery network (CDN).
With the pandemic pushing more businesses and organizations online and making security a critical consideration, Akamai stock has taken off in 2020. AKAM growth over the previous five years was a modest 28%. So far in 2020 AKAM stock has posted gains of 28%, reaching levels it hasn’t seen since 2000.
The old saying “cash is king” went out the window when the pandemic struck. No one wants to risk transmission of the virus by handling cash. Many stores simply stopped accepting cash payment, instead pushing for contactless transactions.
One of the big beneficiaries of this trend has been PayPal. Its Venmo digital wallet app lets people exchange payments and money — without handling cash. It was even supported by the U.S. government, which allowed stimulus checks to be directly deposited to a user’s Venmo account. In addition, the company’s namesake PayPal service can be used to pay at millions of online stores.
PayPal reported $221.7 billion in transactions across its platforms last quarter, up 29% YoY. It also added a record 21.3 million new user accounts in the quarter.
PYPL stock has been in growth mode since 2017, but with the pandemic that has greatly accelerated. At this point in 2020, PYPL is up 81% since the start of the year.
Just because there’s a pandemic doesn’t mean that all business has ground to a halt. Shoppers may be avoiding malls, but there are still a lot of transactions taking place. In addition, companies continue to enter into business agreements, and internal projects at businesses are carrying on. All of these processes (and many more) require signatures and sign-offs.
With so many people working from home and the rest avoiding contact as much as possible, the coronavirus pandemic is proving to be the electronic signature’s moment to shine. And that is reflected in industry leader DocuSign’s stock. DocuSign has 63% of the electronic signature market and the company is making a push into AI-powered contract analytics that make it even more appealing as a solution for enterprise customers.
DOCU stock had been a slow burner, but it caught fire in 2020, becoming one of the year’s best-performing tech stocks. Now trading over $210, shares in DocuSign are up 183% so far in 2020.
Shares in Etsy — the e-commerce site focused on handmade crafts — were on the move in 2018 and 2019, before posting their sharpest drop in four years last October. There were concerns at the time about Etsy’s growth prospects.
That’s not a problem in 2020. The pandemic has meant everyone is shopping online. It has also shut down many flea markets and weekend craft shows, driving more vendors online. Shoppers are getting their fix for crafts on Etsy, and the site has seen a huge surge in demand for homemade masks. In April alone, Etsy vendors sold 12 million masks! It also acquired 4 million new customers that month, and the company says 32% of mask buyers returned to the site to buy other products with 14 days.
At this point, ETSY stock has posted a gain of 194% in 2020, and as InvestorPlace contributor Ian Cooper explains, it could go even higher.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.