How well a company is managed is one of those measures that can be harder to quantify than other factors, such as earnings or cash on hand. Intangible assets – take brand loyalty, for example – can be helped or hurt by the decisions of business leadership. These assets are crucially important to a company's value, says Andrew Little, an analyst with Global X, which runs the Global X Conscious Companies ETF (KRMA). The current pandemic and its effects on the economy have provided a litmus test of sorts, identifying some companies and management teams that are standing out from others. "When the going is good, it's very easy for companies to make stakeholder-friendly decisions," Little says. Here's a look at six companies that are making solid decisions now that the going is bad.
One of the companies navigating the world of intangible assets particularly well during the market crisis is chipmaker Nvidia (NVDA), Little says. The company is providing researchers free access to its Parabricks Genomics Analysis Toolkit, which conducts an analysis of genomic sequencing much faster. That boosts Nvidia's intangible value – a signal of longevity for the company, he adds. The decision to give away access to the genomics tool is a management choice that comes on top of Nvidia's already strong position in gaming processors, which are under increased demand during the pandemic as people are stuck at home and playing more video games. NVDA has jumped by around 50% from its March low as of yesterday's close.
Meanwhile, Google's parent company is also navigating the current market environment well, Little says. The company is providing advertising credits to help small- and medium-sized businesses. Because it's likely that these companies wouldn't have been able to advertise anyway, the ad credits build Alphabet's (GOOGL) brand loyalty without doing extra damage to its financial prospects beyond what the virus-sparked economic slowdown would have caused, he adds. Additionally, Eric Schiffer, chairman of Reputation Management Consultants, points out that Alphabet is helping to combat the spread of the pandemic with its work on contact-tracing software. Shares are up by more than 25% from March's dip as of yesterday.
Auto sales have taken it on the chin amid the economic slump, leaving both manufacturers and dealers to face a rough stretch of road. Within that environment, Carvana (CVNA) has taken steps to navigate the pandemic, making it well-positioned to deal with adversity. The e-commerce platform for buying and selling used cars entered into an expanded financing deal with Ally Financial (ALLY), cheering up investors and contributing to a marked rebound in Carvana's stock price. The company is also giving customers up to 90 days to make their first payment and has implemented a touchless delivery process. "They are certainly thinking outside the box," says Lou Stanasolovich, CEO of Pittsburgh-based Legend Financial Advisors. CVNA has risen by triple digits following the market drop-off last month.
Schiffer points to Facebook (FB) as a company navigating the pandemic economy particularly well from a brand-management standpoint. "Facebook has done a masterful job of working to redefine its image by connecting with the public through compassionate and caring advertising," he says. A recent ad from the company portraying "the heartfelt humanity" of online interaction amid physical distancing, as well as people's focus on pandemic news to the exclusion of almost everything else, will help with the company's image after previous privacy scandals. "Companies now have a way to redefine themselves because they're not going to have the drumbeat of negativity," he adds. As of yesterday, FB is up around 40% from its March low.
For Domino's (DPZ), management decisions that are helping the pizza chain during the market downturn started before the outbreak ever happened, Stanasolovich says. The company has focused on utilizing technology to run its business better over the long term, he notes. In addition to making it possible to order via Twitter (TWTR), Facebook, smart devices and computers, Stanasolovich points to the company's push to use data from its customers to enhance sales. The company's technological edge makes it easier to buy pizzas and deliver them at a time when going out to eat isn't an option for many people. "They were in pretty good shape to begin with," Stanasolovich says. "That's just carried on, really." Shares are up by double digits following the market dip last month.
Netflix (NFLX) offers another notable example of past managerial decisions paying off during a crisis. The company's model of investing in its future by creating original content is now "keeping the world entertained," Schiffer says. Last year, the streaming giant launched 657 first-run original titles, well above the prior year's count of 386, according to analysis from Omdia. And the company seems to be in pretty good shape for this year, in terms of original content, because filming took place before the economic shutdown. Chief content officer Ted Sarandos said on a conference call that its 2020 slate of series and films were already shot for the most part and in postproduction. The company's shares have more than recovered their losses from the market sell-off between February and March and have recently hit record highs.
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