The Work from Home Trend is Entering a New Phase
The COVID-19 pandemic could have one long-lasting effect on the market, even after medical concerns subside.
For most of the year 2020, as the pandemic forced the closure of workplaces around the world, companies that provided virtual work solutions thrived.
Zoom Video Communications, Inc. (ZM) absolutely exploded for a roughly 635% gain between January 1, 2020 and November 1, 2020.
Slack Technologies (WORK) – which has since been acquired by salesforce.com, inc. (CRM) – rocketed up more than 77% at its 2020 high.
RingCentral, Inc. (RNG) climbed as much as 84% during 2020.
But since the rollout of the COVID-19 vaccines, many investors dumped their work from home stocks with the belief that employees will return to their workplaces and that demand for virtual work services would decline.
That’s led to some precipitous drops in several of the biggest work from home stocks in the market.
But recent data suggests that the work from home trend is far from over.
And that means we could see a big rebound in those names.
Where’s the money?
The market tends to be forward looking by at least several months. Traders and investors often attempt to guess at catalysts and trends and how they will affect certain stocks.
But they don’t always get it right.
In the case of work from home stocks, polls conducted this summer show a whopping 87% of respondents want to be able to continue to have the option to work remotely, even after the pandemic subsides.
And 33% of those polled said they did not want to work for an employer that required them to be onsite full-time. Half of them expressed their willingness to find a new employer if their current one doesn’t extend their current work from home policy.
It’s clear to see that there has been a paradigm shift in the way employees want to work.
And if employers are going to continue to offer their employees the ability to work remotely, thus keeping demand for related services high, it may be time to revisit work from home stocks.
Especially those top performers that can be bought at a discount right now.
How do I get some?
Earlier this week, Microsoft announced several planned upgrades to its Microsoft Teams platform.
While that may seem like a tempting reason to jump into MSFT, it’s not the best buy in the space right now, in my opinion.
With new COVID variants threatening swaths of the U.S., the winter months approaching, and workers simply wanting to continue to work from home, we could see a big resurgence soon for Zoom Video Communications, Inc. (ZM).
After a phenomenal run up in 2020, ZM shares have lost approximately 47% of their value since the October 2020 highs as growth slowed in 2021 and investors took profits.
In its Q2 2021 earnings report, ZM revealed a 54% YoY revenue growth. And with the potential for demand to increase in a big way, the decline in share price we’ve seen this year seems to present us with a fantastic buying opportunity right now.
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In the Spotlight: The Evolution of GameStop
While it has enjoyed it’s status as a “meme stock,” GameStop Corp. (GME) has been working towards becoming more than a company whose share price is driven by short squeeze traders.
And it appears to be following a very successful blueprint to do so.
During its Q2 2021 earnings call last week, GameStop said in its statement that it is “evolving from a video game retailer to a technology company that connects customers with games, entertainment and a wide assortment of products.”
That mindset is one that has helped Amazon.com, Inc. (AMZN) grow into the retail giant it is today. In its early days, when Amazon sold exclusively books, founder Jeff Bezos was known to say that Amazon was not a book seller, but a technology company.
While GameStop was somewhat vague about what its plan actually entails, it did state its intention to expand its offerings to collectibles, toys, and other products related to the video game industry. It will also look to improve its technology through the purchase of new systems, with a focus on e-commerce.
Online sales have already dramatically increased, up 800% in the latest quarter. With a horde of eager buyers and a new vision for its future, GameStop is a name to keep an eye on.