Revenue Growth During the Coronavirus Crisis

Microsoft looks to potential TikTok acquisition. Some interesting stats in a recent WSJ article covering revenue and valuation:

• Revenue: “TikTok globally isn’t profitable. ByteDance projects the app will have $1 billion in revenue this year and $6 billion next year, said a person familiar with it.”
• Valuation: “ByteDance was valued at $100 billion in a March fundraising round. Some investors prepared a bid that valued TikTok as a stand-alone at more than $30 billion, according to one person briefed on the bid.”

With the Trump administration turning against the Chinese-owned video app, Microsoft looks for an opportunity to step into a young social media base. Perhaps most attractive to Microsoft is that the scale and growth of this app might allow it to compete with Facebook, which is currently facing regulatory scrutiny. Per the article, TikTok gained 315 million users in the first quarter of this year; more than any other app has managed in a single quarter. This brought its total user base up to 2.2 billion globally.

Government-imposed shutdowns intended to mitigate the spread of the coronavirus are having an unexpected impact on the price of uranium, which is used to fuel nuclear power stations.

After a long downward trend, the price of uranium per pound rose 20% in March. An article in the FT reports: “Such a rise since a recent low is the common definition of a bull market.”

Click on the link below for a very interesting read.

Wayfair’s largely online presence and e-commerce business model is providing an opportunity to take market share at a time that “80% of the category is closed for business.” Shares soared 51% on April 6th in response to news that the company would meet its forecast.

(Note: As of April 9th this impressive rally has persisted.)

An article in the WSJ reports that “peak daily meeting participants have soared from 10 million at the end of December to more than 200 million as of March.” The article mentions that much of this activity is confined to the free version, so it is difficult to determine how this will impact revenue, but the stock has been performing incredibly well: up 81% YTD.

Click on the link for a description of the challenges the company faces as it attempts to keep up with this fantastic growth.

Bloomberg published a chart showing the year-over-year change in wine, beer and liquor sales for the third week of March.

• 82% – Premixed Cocktails
• 80% – Cocktail Mixes
• 63% – Spirits / Liquor
• 47% – Wine
• 32% – Beer
• 23% – Carbonated Drinks

The immediate increase in work-from-home activity as the coronavirus became a global pandemic caused a massive spike in laptop sales. Per an article in the WSJ, anything that facilitates working remotely, including laptops, keyboards, video cables, computer monitors and small TVs were either nearly sold out or completely gone at a Best Buy in Chicago. Online marketplace HUBX claims that “business has gone through the roof,” with computer and mobile phone sales volumes having doubled over the prior year.

Overall it does not appear to be a trend that will have a significant impact on hardware manufacturers bottom line. “The supply hitches mean that the current surge in demand for laptops may well not translate into a boon for PC makers.”

Click on the link below for commentary on how Apple, Dell, HP and Lenovo Group are responding.

Per an article in Barron’s, the coronavirus crisis is highlighting surging U.S. demand for cannabis. U.S. sales reached $13 billion across 33 states. The article did not provide prior year aggregate numbers but stated that Florida-based Trulieve Cannabis saw February’s third week sales jump 50% over the corresponding week in January and another 50% in March.

Click on the link below for comments on valuation for specific stocks.

The number of GoFundMe campaigns tied to small businesses provides another measure of just how much these companies are struggling during the coronavirus crisis. An article in the NYT states that coronavirus-related campaign growth grew 60% from 22,000 to 35,000 from March 20th to March 24th, and that as of the latter date 14,000 of these campaigns were tied to small businesses.

Crisis aside, campaigns average a 27% success rate (measured by goal achieved). Unfortunately the article concluded that surging demand and the fact that many potential donors were likely facing their own economic crisis would result in a lower success rate for these companies.

An article in the Financial Times states that businesses in the adult novelty space are seeing revenues grow at unprecedented levels. The article did not provide statistics for the industry in aggregate, but anecdotal accounts suggest large revenue increases:

• Ritex, a manufacturer of condoms in Germany, reported that sales have doubled over the prior year.
• Eis.de, an online retailer in Germany, reported a “300% increase in sales aids for men and women in the southern state of Bavaria, and a 3,000% increase in demand for fantasy nurse costumes.” Jumbo packs of condoms containing 100 units each jumped 500%.

Even with this incredible growth supply may not be matching demand. The article claims that retailers are struggling to maintain adequate inventory. Click on the link below for more examples.

Medical waste management firms in China saw volumes increase ~600% in Wuhan as infection spread. Per an article in the WSJ, Chinese officials stated that medical-waste facilities were at or near capacity in 29 cities.

Companies in the U.S. do not yet know how volumes will grow in the coming weeks. Offsetting the growth is the decline in waste generated by elective surgeries and procedures as well as the significant decline in dentist visits. The article also claims that this disease does not generate as much waste per patient compared against other prior crises such as Ebola.

Needless to say volumes are expected to increase. Whether or not demand was expected to overwhelm capacity in aggregate was not addressed.