Will digital investment pay dividends?
One winner of the COVID-19 outbreak has been the digital stay at home companies. Netflix, Amazon, Facebook, and all companies that are in the tech sphere have seen their usage increase. Furthermore, many companies are finding that their workforce are more than able to fulfil their responsibilities from home. It will not be a surprise if we see less investment in large office buildings in the future as companies realise the hidden value of a homebased workforce.
Work is not the only area that may never be the same again post COVID-19. It also seems to be accelerating trends in the way people live. Many people are thinking through the way they organise their lives and it is difficult to see all behaviour returning to exactly how it was pre-COVID-19 even if a successful vaccine is discovered. In fact the need for new solutions in a locked-down world has encouraged the digital world to really double down on transformation.
Will a digital world prosper post COVID-19
One of the questions on Bloomberg's markets live blog this week was will a 'digital reboot sustain after virus?' It's a good question and one that is hard to answer. The initial impact of COVID-19 shutdowns sent the tech led Nasdaq close to its dot.com bubble peak relative to the S&P500. See the Bloomberg chart below:
The Nasdaq has also made new record highs recently on the expectation that tech companies offer one area where earnings should hold up. The question now is one of sustainability. Can this surge continue or is this another bubble ready to burst? Companies are now investing heavily into digital transformation in the hope of being part of a new transformed digital age. The question is will the hopes of that age actually deliver in a post viral world?
