The Secret to Tech's Resilience to COVID-19- Infrastructure Expansion

Covid-19 has given many words an entirely new meaning. Bluechips being the first, as their definition involves performing well during downturns. Yet the modern world has never seen such a downturn where the entire economy is literally put on a virtual standstill.

As performing well became next to impossible with supply chain disruptions, store closures, and ultimately governments keeping half of the human population shelter-in-place to help contain the spread of this invisible enemy, we started to focus on ‘resilient' companies. And just like in downturns, we always turn to Big Tech. And their earnings proved they are indeed resilient to COVID-19 two weeks ago, it still inflicted pain but the tech empire is striking back by expanding its infrastructure and devoting significant funds to fight back.

As this has been the week of retail earnings, social media giant Facebook FB made its biggest push yet into e-commerce on Tuesday. With the debut of Shops, it allows small businesses to make virtual storefronts out of their business profiles both on Facebook and Instagram. Its stock got a huge boost as it partnered with Shopify SHOP to bring the tech industry together to help troubled entrepreneurs succeed at a critical time.

Amazon AMZN is among the sore spots as despite being labeled as the ‘winner' of the pandemic, its profits were less than expected due to COVID-19 costs which are expected to wipe out even the next quarter's profit. Along with raging employees that don't feel safe and protected with the company's health protocols in place and the fact its competitive advantage, Prime delivery, is unknown when to be resumed, the company is not at all in an envious position. However, Amazon's success story is nothing short of extraordinary and we shouldn't take this is a sign the company is in trouble as AWS booked more than $10 billion in quarterly revenue for the first time and we know that the company's rulebook is to reinvest profits back into the company. Devoting the profit to fight COVID-19 could help Amazon indeed become the winner of the pandemic and emerge out of it even stronger.

One which surely thrived during the pandemic is Netflix NFLX as besides reporting double the amount of forecasted subscribers that now form its base of 182.86 million, the streaming giant has growth potential ahead. But its cash balance is not as rich as that of Apple AAPL that has $83 billion in disposable cash to cover quite a few years of expenses. With its latest quarter, Netflix showed quite a burden with $14.7 billion of debt and only $5.15 billion in cash. Fortunately, monthly subscriptions bring in a recurring revenue stream to pay expenses and invest in new content, but filming and voice-dubbing for foreign releases have been put on hold. Fortunately, several projects have already competed so despite not being an ideal situation, it didn't dim its thriving success during the pandemic that even cemented its global status with further opportunities in Asia-Pacific and India.

Outlook

Even Apple will face problems if its subscriptions and sales-based revenues no longer continue making up for its lost iPhone sales, the company's last invention which you will agree is not at all recent so value-adding innovations are always the only way forward. This is how Big Tech has expanded into building the digital infrastructure by taking a bigger hold on media, shipping, and retail. It gave the world what it needs to weather an unprecedented economic shutdown and it is looking stronger than ever as we are more reliant on it than ever before.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be sent to ivana@iamnewswire.com

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