Following the world’s lockdown in the COVID-19 pandemic, the market is set to begin once. There is much to consider for 2020 if you are thinking about where to invest, the markets are changing, as they do.
Many of the giants in their respective industries, while sound and good investments are already reporting a mixed bag of good and bad when looking at 2020, and the end of 2019.
Apple’s recent report of “CNBC” expectations of sales and revenues and that trade is once again set for a strong start and looks invincible in 2020.
This bit of information caused Apple’s shares to drop 19% from its record high.
In a letter to investors from Daniel Ives, an analyst at Wedbush Securities, Daniel acknowledged this slowdown of sales and also pointed a finger at China’s lockdown that most of China saw during the month of February with stores closed and the supply chain under massive pressure due to the coronavirus outbreak in the country
China is a major player in the global economy and also provides materials for many manufacturers around the world. Apple will not be the first and only company affected by these changes.
However, investors are still concerned.
It does go to show the huge role politics can play in the investing world.
Next up for 2020 to look out for is another Internet Giant, Netflix.
There are some good news and bad news about Netflix in COVID-19. The good news is that Netflix adds 15 million new subscribers in the amid COVID-19 and the bad news is the Netflix market has also been affected in three ways:
First, its membership growth has temporarily accelerated due to home confinement.
Second, our international revenue will be less than previously forecast due to the dollar rising sharply.
Third, due to the production shutdown, some cash spending on content will be delayed, improving our free cash flow, and some title releases will be delayed, typically by a quarter.”
Netflix has been increasing its online memberships but at a cost of high debt. Their model does show profit points, but it is a “spending money to make money” model. And they are using debt/borrowing to fund new films, shows, and projects.
For investors this may seem problematic, do you invest now and play the long-game, or wait and see, and invest later on.
With their recent film starring Sandra Bullock, “Bird Box” drawing in over 45 million viewers, one may take the stand that 2019 could be the year of Netflix.
A slight increase in membership rates in 2020, along with millions of new subscribers, could see the company become a smart investment.
Speculation, or prediction?
There are the naysayers, such as New York Finance Professor, Aswath Damodaran, who states, “Netflix’s fundamental business model seems unsustainable.”
“I don’t see how it is going to work out.”
He adds regarding the increased competition in the market, “Netflix must keep spending enormous sums on content and marketing. If it cuts spending, he said, it is likely to lose much of its precious audience.”
The Brexit and Investors
If you live in the UK, the EU, or even some other countries, you may have your eyes on The Prime Minister, Parliament, and also the EU Commission, as they all seek a Brexit plan to leave the EU.
It is a fact that the UK parting ways with the EU will help some businesses, and will hurt some businesses.
Those companies that depend on parts and supplies made in the EU, or certain foods to be imported, and even workers from the EU may find their operating costs increased due to import tariffs, lowering of immigration, and just a change in how they trade.
Banks and other financial institutions have already begun moving some offices abroad in anticipation of any future issues.
Airlines have sought out a temporary “open skies” agreement to continue flying.
Investors are looking at the Brexit as either an opportunity to increase their coffers, or sell off what may not fare well in the transition.
There are even investors, such as “The Big Short” character Steve Eisman, who is “shorting” two (2) UK lenders.
He is betting and putting his money down figuring these lenders will lose money during and after the Brexit.
So 2020, already off to a start with a bang as investors decide where and what to invest in.