By Maria Armental
The shock of the coronavirus pandemic fueled a tech boom driven
by online gaming and remote computing services in the most recent
quarter, while companies such as airlines and entertainment
ticketing services saw their business evaporate, driving big losses
and even below-zero revenue.
The pandemic's uneven hit, reflected in companies' financial
performance and data tracked by Dow Jones Newswires, is hampering
the U.S. economic recovery and exacerbating the socioeconomic
"The difference in the prospects of the 'have nots,' the 'haves'
and the 'have much more' is especially stark in the post-Covid-19
world," data firm IHS Markit said, projecting an uneven K-shaped
"And you can see this very clearly in their stock prices," said
Nariman Behravesh, IHS Markit chief economist, pointing to extreme
differences across industries and demographic and income
Take Nvidia Corp. and Occidental Petroleum Corp., the best and
worst performing stocks respectively in the S&P 500 index over
the past 12 months through Thursday's closing.
Nvidia, whose stock has nearly tripled in that time, initially
lowered its first-quarter revenue forecast to account for the
pandemic's potential impact. It went on to report a 39%
first-quarter revenue increase, a 50% revenue increase for the
second quarter and is on track for a record revenue year, driven by
demand for online gaming and remote computing services.
Occidental, one of the largest U.S. shale producers whose stock
has lost more than three-quarters of its value over the past 12
months, was already laden with debt from buying Anadarko Petroleum
Corp. when the pandemic hit and oil prices collapsed. The
Houston-based company, which had raised its dividend every year
since 2002, slashed the dividend to a penny a share as part of
broader spending cuts. It reported a second-quarter net loss of
$8.35 billion and is expected to report its largest annual loss,
according to FactSet.
Data tracked and analyzed by Dow Jones show the uneven effects
of the pandemic, with at least 20 tech companies in the S&P 500
raising financial projections from July 1 through Sept. 30.
Conversely, no companies in the energy, leisure, or entertainment
spaces raised their outlook during that period, according to Dow
The energy sector has been clobbered by an about $160.75 billion
revenue drop so far this year, according to Dow Jones data.
Tech companies have experienced a $31.47 billion revenue gain,
second only to retail and wholesale, but much of that
retail/wholesale gain was driven by Amazon.com Inc., according to
Other winners include healthcare and life sciences companies,
which account for the second-largest percentage of firms that have
raised financial projections, Dow Jones found.
The health industry winners aren't just those working on
potential treatments for Covid-19, the disease caused by the new
coronavirus. Glucose-monitoring device maker DexCom Inc. is the
second best performer on the S&P 500 over the past 12 months,
after Nvidia, with shares also more than doubling in price over
DexCom initially suspended financial projections for the year,
but in July it said it expects $1.85 billion in revenue this year,
$100 million above the midpoint of its initial forecast.
DexCom is benefiting from a bubbling technology-adoption trend
along with recent telemedicine gains, said Kyle Rose, an analyst at
Canaccord Genuity Group Inc. DexCom is a Canaccord client.
Companies relying on personal interactions saw business all but
disappear as governments ordered people to stay home and stores to
close to curb the spread of the coronavirus.
Concert promoter Live Nation Entertainment Inc. has seen a $3.45
billion revenue drop and reported negative revenue for its
ticketing business in the most recent quarter. Company officials
said they believe this will be a blip and note that concert and
festivals ticket sales are pacing ahead of last year.
"Our expectations for a robust outdoor summer season in 2021 are
also reinforced by the two-thirds of fans keeping their tickets for
canceled festivals so they can go to next year's show, along with
the strong early ticket sales for the festivals in the U.K. next
summer," Live Nation Chief Executive Michael Rapino said during the
second-quarter earnings call in August.
With travel demand showing few signs of rebounding, revenue lost
by airlines is also in the billions. Delta Air Lines Inc. and
American Airlines Group Inc. alone have lost more than $12 billion
each, Dow Jones data show.
And the International Air Transport Association has said it
doesn't expect passenger demand to recover to pre-pandemic levels
For car makers, the revenue loss was even greater, the Dow Jones
data show, with the original Detroit Big Three-- Ford Motor Co.,
General Motors Co., Fiat Chrysler Automobiles NV--losing a combined
nearly $70 billion in sales in the first half. Fiat Chrysler isn't
in the S&P 500.
Still, Tony Roth, Wilmington Trust Investment Advisors' chief
investment officer, sees potential for the hospitality and airline
industry. Current conditions have created pent-up demand that, once
people feel safe to fly again, should help the industry and related
businesses, Mr. Roth said.
Similarly, cruise ship operator Carnival Corp. has pointed to a
post-pandemic cruise recovery, saying: "With two thirds of our
guests repeat cruisers each year, we believe the reduction in
capacity leaves us well-positioned to take advantage of the proven
resiliency of, and the pent-up demand for cruise travel--as
evidenced by our being at the higher end of historical booking
curves for the second half of 2021."
Norwegian Cruise Line Holdings Ltd. and Carnival are the fourth
and fifth worst performers in the S&P 500 over the past 12
Mr. Behravesh, the IHS Markit chief economist, said he also sees
a recovery in the hospitality and travel sectors and in
entertainment, but one dependent on the widespread availability of
He sees the transportation sector's forecast as a little more
mixed and the energy sector lagging behind. But the recovery, he
said, will eventually trickle down to the energy sector, which
should get a lift from people moving to suburbs and buying
And while White House economic adviser Larry Kudlow has said he
expects to see a rapid, V-shaped recovery, Mr. Behravesh says that
though parts of manufacturing are seeing V-shaped recoveries, the
service sector is seeing, at best, a U-shaped recovery and a "very
Write to Maria Armental at firstname.lastname@example.org
(END) Dow Jones Newswires
October 23, 2020 11:23 ET (15:23 GMT)
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