- After a crash in early September, tech stocks have recovered some of its gains this week.
- While Shopify remains in demand among Canadian investors, US stocks like Apple, Microsoft, Facebook, etc also remain hot.
- Microsoft and Apple stock prices have seen a steady growth in last six months in the face of the pandemic.
- Netflix gained over 10 million paid net additions to its subscriber base in Q2, while Facebook reported an average of 1.79 billion daily users in the same time period.
Tech stocks have been a favorite among investors through the troubled times of COVID-19. Though they crashed by over 8 per cent in the first week of September, the TSX tech index has seen a steady growth of 35.5 per cent year-to-date. In the last six months, Canadian tech giant Shopify (TSX: SHOP) has returned gains of 107.8 per cent. The Wall Street has been riding on the improving performances of Apple (AAPL:US), Netflix (NFLX:US), Microsoft (MSFT:US), Facebook (FB:US) and Amazon (AMZN:US).
The coronavirus-triggered lockdown has kicked the demand for e-commerce and telecommunication services up a notch with increasing need to accommodate a homebody economy. With that, the stock markets underwent a change and the information technology sector witnessed a boom.
While Shopify remains a darling among Canadian investors, here's a quick look at some American tech stocks that have emerged as winners amid the pandemic:
Netflix (TSX- NFLX:US)
Current Share Price: C$ 482.03
Despite the existence of an assortment of competitors, Netflix has become pretty much synonymousto online streaming. Living up to its catchphrase, it has repackaged sloth as 'chilling' and has been performing successfully through the pandemic. Netflix stock price has grown over 32 per cent in the last six months, with a 10-day average trading volume of 6.5 million.
The world's largest paid streaming giant posted a revenue of US$ 6.15 billion in the second quarter report of 2020, as against US$ 5.7 billion in the first quarter. It registered a nearly 25 per cent YoY growth in Q2, and operational income of US$ 1.35 billion.Netflix also reported over 10 million paid net additions in the second quarter.
When not scrolling through the bottomless pit that is Facebook, a considerable amount of paying customers trapped in their homes during the pandemic use Netflix.According to a Statista report, Netflix had about 193 million paying subscribers around the world as of July 2020. It also remains a favorite among audience seeking video streaming service, leading way ahead of Amazon Prime and Hulu. Disney is the latest to challenge the streaming giant’s authority, but it still remains a Netflix vs all online streaming providers' battle.With a market cap of nearly C$ 213 billion,Netflix is one of the major tech stocks that has the potential for growth, as the demand for quality online content isn’t going anywhere any time soon.
Apple (TSX- AAPL:US)
Current Share Price: C$ 112
After the declines in the first week of September, Silicon Valley giant Apple caught up by over 4 per cent on Wednesday at the NASDAQ. But that is not the only factor that makes this tech company a winning horse for the long race. Apple is one of the largest companies in the world in terms of market cap, currently standing at C$ 1.95 trillion. Its fiscal 2020 third quarter report posted a revenue of nearly US$ 60 billion (11 per cent YoY hike) and a quarterly growth of 18 per cent in its earnings per share. The company also registered an operating cash flow of US$ 16.3 billion in Q4.
Apple is also set to host its big September event next week. Excitement among tech enthusiasts is running high as many expect a first ever iPhone model with 5G services. Reports of Apple replacing the existing Intel processors with internally developed chips are also doing the rounds.
In the last six months, Apple share price has climbed nearly 66 per cent. The company also implemented a four-for-one stock split in August.Shortly after this announcement, Apple's market valuation had crossed US$ 2 trillion to overtake Saudi oil giant Aramco, becoming the largest company by market cap on the planet. The September stock slide, however, pulled its market cap down.
Current Share Price: C$ 266.61
While a number of companies felt the heat of the economic crisis during the pandemic, Facebook’s user base remained unscathed. If anything, its business saw a massive boost in the coronavirus times where virtual connectivity is the safe way to catch up with people.
The tech stock crash in the early days of September saw Facebook stocks nosedive by over 7 per cent (between September 1 and 9). But the big picture shows that the social media industry giant is still a strong player in the field. In the last six months, Facebook’s stock price has increased by nearly 57 per cent.Its second quarter earnings report (ending June 2020) showed a robust 98 per cent year-over-year increase in net income. Its income from operations was also up by 29 per cent YoY and total revenue increased by 11 per cent YoY during Q2 2020.
As per Facebook’s second quarter 2020 report, the social media site saw an average of 1.79 billion daily users, a 12 per cent YoY increase. In April, CEO Mark Zuckerberg announced that more than 3 billion people use Facebook or at least one of its sister platforms (Instagram, WhatsApp and Facebook Messenger) on a monthly basis, and more than 2.3 billion use one of these services every day. If these statistics are to be believed, then two-thirds of the world's total internet population is sitting on Facebook.
Microsoft Corporations (TSX- MSFT:US)
Current Share Price: C$ 204.03
As working from home became the new normal in these coronavirus-inflicted times, Microsoft applications like Microsoft 365, Dynamics 365, Teams, etc. became vital tools that enabled a smooth transition into remote-working environment. Since hitting its lowest point during the pandemic-triggered market crash in March, Microsoft has made a good recovery — an increase of nearly 51 per cent in the last six months, with 30-day average moving volume of 36.3 million. Since the tech market dip earlier last week, Microsoft, again, clawed its way back up by more than 4 per cent.
In its fourth fiscal quarter of 2020, Microsoft posted a revenue of US$ 38 billion, a 13 per cent increase from the same quarter last fiscal year. Its operating income, amounting to US $13.4 billion, also saw an 8 per cent rise as compared to Q4 of the previous fiscal year. Adding to that, Azure, Microsoft’s cloud computing service, saw revenue growth of 47 per cent in Q4.
Another factor that is likely to influence Microsoft’s stock performance is the recent announcement of its upcoming Xbox products. Xbox Series S and Series X game consoles are scheduled for release on November 10, orders for which can be placed starting September 22.