How IT companies feel during the crisis

The coronavirus pandemic has gone like a rollercoaster throughout the global economy. Everyone got it: both small companies and global IT giants. Let's take a look at how the largest players in the global IT sector are doing. Let's take the following companies for analysis: Amazon, Apple, Epam, Facebook, Google, Microsoft, and Netflix.

All seven companies showed good growth in 2019. The leaders were Apple and Epam, whose shares rose 87% and 86%, respectively. Amazon had the most modest growth - only 23%.

But, for less than six months of this year, the picture has changed slightly. The growth leaders were Amazon (36%) and Netflix (25%). Modest growth of 5% for Google and 10% for Epam.  

The peak of the crisis fell on the period from mid-February to mid-March of this year. In just a month, the shares of all seven companies fell by about 30%. The strongest decline was in Epam - shares fell 38%. Amazon shares dropped the least of all - by only 26%.

A recovery phase began in the market in mid-March. During this period, the company's shares rose from 40% to 60%. Apple shares gained the most. The growth was almost 67%. Google has the most modest growth - only 39%.

Currently, only Epam, Google, and Microsoft are trading just below their pre-crisis peak in February 2020. Amazon, Apple, Facebook and Netflix are trading above their February peak.

As you can see, the global crisis has affected absolutely all companies, including global IT giants. But, unlike in the air travel, tourism or restaurant business, IT companies quite easily survived its consequences and today they have almost completely recovered. 

There are a number of reasons for this computer quetions.

The first reason. High business diversification. The companies in question have quite a few different lines of business and do not focus on just one. For example, Amazon today is not only the largest e-commerce platform. The company develops such business areas as data storage and processing (AWS), logistics, streaming (Twitch), electronics (Kindle) and other areas. This allows you to distribute risks in several directions and to insure against a sharp drop.

The second reason. Diversified portfolio of orders. The companies in question have an extensive client base from various business sectors. The same Mircrosoft is working on government orders not only in the United States, but also in other countries. In times of crisis, government orders sometimes save entire industries. Epam has many orders in its portfolio from large financial corporations that can pay their obligations even in times of crises.

Third reason . These are "deep pockets". Large IT companies have not only serious reserves in the form of their own funds, but also very quickly can find cheap external financing in almost unlimited amounts.

The fourth reason . Industry specifics. In the IT sphere, a digital product is created that does not deteriorate, does not require storage space in warehouses, does not require components from other countries, it is easy to scale, and so on. This allows IT companies to significantly reduce the cost of producing digital solutions.

All this together allows the IT industry as a whole to feel comfortable during periods of even the deepest economic crises.