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2020 was a hard year for the US financial markets, but the damage is not irreparable, and not every company went down into a slump that will take years to recover from. Multiple US-listed companies primarily from the S&P 500 index had an amazing year in terms of growth, some even doubling within just 10 months.
In this article, we would like to take a look at these companies and see what was the reason behind their immense growth during a crisis the world hasn’t seen for more than a century.
Etsy is an e-commerce store focusing on the US market and hasn’t been listed publicly for too long. Many experts have commented that the recent growth for this company was mostly due to their relative youth in the market combined with the uncertainty of the pandemic.
Being an e-commerce store ETSY had absolutely no issues to continue its operations nor did they have to add any additional costs to their business plan. Everything continued as it was supposed to be for the company. Due to the fact that half of the US was avoiding grocery stores or any other store to be exact, both small and large e-commerce stores saw immense growth in their revenues.
Naturally, Amazon made a lot more in terms of just numbers, but when it comes to percentages ETSY really outdid themselves.
Comparing the 2020 Q2 net revenue to the 2019 metrics we see immense growth. To be exact, the net income in 2020 was slightly more than $95,000 while 2019 shows just $18,000. Although many may think this is a 500% increase and not 174% consider that the growth mentioned above is for the stock price and not the overall revenue.
Seeing these numbers it’s quite easy to understand why investors would swarm the company and buy up as much as possible. Since the pandemic is still an issue in the US, most people assume that the growth will continue.
NVIDIA has been one of the primary stocks to invest in for the last couple of years, so its recent growth is not too surprising. It is featured by a large list of trustworthy stock brokers in the US as well as other countries that contribute to its success in one way or another.
But it’s not just market speculation that got NVIDIA in this situation. It was the introduction of several new products, improvement of their previous services, and various other ventures.
For example, NVIDIA released its new graphics card the GeForce RTX 3080 on September 17th. Within just a couple of minutes, the product was completely sold out and placed on various e-commerce platforms by re-sellers.
The fact that there was this much demand for a single product was enough for investors to hike their investments in NVIDIA stocks. Many flooded the market to buy as much as possible before the news went too viral or before NVIDIA reported its Q3 earnings.
But the report states that Q3 earnings were lower than last year, about $170 million lower to be exact. This earnings disparity did put a hinge on the stock price growth factor, but with a subsequent release of Q4 earnings and roundup of the fiscal year, it’s clearly seen that there is a 41% growth compared to last year and a 3% growth compared to last quarter.
DexCom primarily focuses on manufacturing glucose monitoring systems in order to make diabetes management much easier.
Their earnings report for Q2 of 2020 showed that they had jumped nearly 10 times higher than they were making in 2019.
Most experts attribute this success to the increased awareness of their primary product, the G6 CGM system. Despite the increased distribution, the gross profit margin for DexCom did not increase too much, just by 1.4% compared to 2019. However, the numbers speak for themselves. We can see that in Q2 2019, the net income was $7.8 million while this year it was $77,1 million.
This was supported by only a 4.3% increase in operating costs as well. All of this information was more than enough for speculators to immediately pounce on the opportunity and buy up DexCom shares.
As awareness keeps growing and DexCom’s systems continue to stay in demand, many experts think that growth for this company will continue way into the pandemic, but just like COVID itself, the market is completely unpredictable.
DexCom may have had a successful year, but that doesn’t immediately qualify it for yet another profitable run in a few months or so.
It would have been easier to mention a conclusion if there were some connections between the companies that performed admirably, but there is not too much to grab on to. The most simplistic reasoning for DexCom and Etsy is that they were both perfect options for a market disrupted by a pandemic, while NVIDIA is just NVIDIA and will always have people lunging to buy its latest product.
