From the pandemic and economic recession to the trade war with China and now U.S. President Donald Trump’s COVID-19 infection, the markets and the corporate world have had a topsy-turvy ride in 2020. Yet any shake-up also brings forth fresh ideas and unlikely winners, while slaying some old giants and revealing which large firms are best positioned to grow further. Today’s Daily Dose takes you behind the business headlines and up close with the global biggies that are expanding their waistlines, the upstarts raking in the moola from stock markets, the companies whose names you might soon hear everywhere and those that slipped up so badly their burials are being planned.
Charu Sudan Kasturi, Senior Editor
They were already some of the biggest firms in the world. The pandemic has made them even richer.
No, not the creature that’s believed to have transmitted the coronavirus to humans at a wet market in Wuhan, China. We’re talking about Baidu, Alibaba and Tencent, three behemoths of Chinese tech that have gained during the pandemic thanks to a combination of market dominance, their home country’s rapid recovery from the COVID-19 crisis and innovations that these firms quickly embraced. In March, all three used their cloud-computing and AI expertise to launch health tech initiatives at a time when the disease was at the top of everyone’s mind. By May, stocks of Baidu — China’s largest search engine — were outperforming Wall Street expectations. With billions of people cooped up at home, Tencent, the world’s largest video game producer, saw its online games sales rise 40 percent in the year’s second quarter, during which Alibaba’s primary e-commerce business also grew by a third.
2. Relying on Reliance
Asia’s richest man, Mukesh Ambani, managed to keep the checks rolling in despite the pandemic. Reliance Industries Ltd., his company, has for years been a giant in energy, textiles and retail. Now as more and more countries turn away from China’s Huawei, Big Tech is betting on Ambani's telecommunications firm, Jio, as a global alternative. Jio raked in $15 billion amid the pandemic through investments from Facebook, Google and others. Ambani, worth $80 billion, has overtaken Warren Buffett to assume fourth place in global wealth rankings, and Jio is poised to launch India’s first 5G network.
3. Time to De-FAANG?
Before the emergence of China’s BAT, there was already America’s FAANG, an acronym for tech giants Facebook, Amazon, Apple, Netflix and Google. All five — and Microsoft — have surged during the pandemic and their rise has taken the overall stock market to new highs. But, thanks to Spider-Man, we know that with more power comes greater responsibility, a concept that Congress is convinced Big Tech doesn’t truly get. Which is why the chiefs of Google, Facebook, Apple and Amazon were grilled during an antitrust hearing by the House Judiciary Committee. Congress isn’t done. The Senate Commerce Committee has summoned the CEOs of Facebook, Google and Twitter for another hearing on Oct. 28. Will Congress break up Big Tech or impose more regulations on these firms accused by the left of facilitating election manipulation and promoting hate speech and by the right of censorship?
4. Teflon Tesla
Maverick CEO Elon Musk believes he has superhuman immunity. He has said he and his family won’t take the COVID-19 vaccine once it becomes available because he doesn’t believe he’s at risk. Musk’s hubris is understandable — though misplaced — given his firm’s exploding gains amid this year’s global crisis. The electric vehicle company saw its stocks rise 74 percent in August, and its gains continued in September even though its efforts to get listed in the S&P 500 have failed for now.
5. Fortnite’s Future
It could rest with one of the world’s largest companies that you’ve probably never heard of: Prosus. The Amsterdam-listed global arm of South African internet firm Naspers — Africa’s most valuable company — owns a third of Tencent, which in turn has a 40 percent stake in Epic Games, which created Fortnite. So it’s no surprise that Prosus, like Tencent, has grown amid the pandemic, with Fortnite picking up 100 million additional users over the past year.
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European food delivery giant Just Eat and American peer Grubhub didn’t let the pandemic postpone their very public marriage after seeing off other suitors. In July, Just Eat announced plans to buy Grubhub for $7.3 billion, stealing the American firm away from UberEats, which had been trying to woo it. The final approvals for the deal came through in September. The investment makes sense: The food delivery industry has been a major beneficiary of 2020’s lockdowns and quarantines, with Just Eat more than doubling its revenues in the first half of the year, compared to 2019.
The Brazilian fashion retailer is leading the South American nation’s IPO boom this year. In July, Soma raised nearly $350 million from an IPO. From retail to pharma and online education to home improvement, other Brazilian firms too are eyeing an opportunity to bring in cash from a market that appears oblivious to the pain of millions around the world who’ve lost jobs. Brazil is witnessing an IPO boom unlike any it has seen since 2007.
Which companies should you invest in? It’s a tough question at the best of times. In 2020, it’s a gamble. But taking a look at where some of the world’s most successful investors are putting their money is always a good start.
Afsaneh Beschloss manages $14 billion as CEO of RockCreek, after serving as a top executive at the World Bank. So she knows a thing or two about the global economy, and she has her eyes on Devoted Health, a health system delivery company, and Apeel, which tackles food waste by making produce last longer. “These are companies that are smaller, that are growing super fast, unbelievable leadership, and they are the future,” Beschloss tells OZY’s co-founder and CEO on the extended podcast version of The Carlos Watson Show, presented by American Family Insurance.
Latin America’s fastest-growing company, the Mexican startup is one of the world’s most heavily funded fintech firms, and drew $100 million in investment from SoftBank last December. Its model? Online loans to small and medium-size companies that find it hard to get credit from traditional banks. It could be the future of the region’s economy.
3. Jekyll and Hyde?
Despite being put on a U.S. blacklist, the $4 billion Chinese facial recognition and AI company Megvii is still finding capital and contracts abroad — a sign of its durability and versatility. China’s law enforcement uses its tech, which has raised questions about Beijing’s surveillance, but it also has myriad other uses to confirm identities for such actions as mobile payments and ride hailing.
Obi Ozor was studying to become a Catholic priest when a kidney disease forced him to give us those dreams. Today, he's leading Africa's most ambitious logistics company, trying to halve delivery times in a continent notorious for its poor roads, underdeveloped air networks and dilapidated ports. Kobo360, Ozor's 2-year-old startup, has already moved more than $2 billion worth of goods, and counts consumer goods FMCG giants Unilever, Olam and Honeywell among its clients in Nigeria. The company has also entered the Ghana, Kenya and Togo markets, and plans to expand across other parts of Africa and into Asia. And it's innovating in real time to manage its operations during the coronavirus pandemic. Kobo360 has built its own GPS of sorts, a blockchain-based platform that allows the company to remotely track the entire logistics supply chain.
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The exploitation of shale deposits has powered an energy revolution in the U.S. in the past decade-plus, turning the nation into a net energy exporter. But the plunge in oil prices that accompanied the pandemic has sent the country’s oil and gas producers reeling. A bankruptcy filing from Texas-based Lonestar Resources last week was one of dozens this year, including Chesapeake Energy, which pioneered the technology of fracking and was once valued at $36 billion.
3. Fasten Your Seat Belts
It was always going to be a turbulent ride with the COVID-19 crisis bringing most aviation to a halt for months this year. But no safety instructions could have saved the airlines industry from its biggest hit ever. And no region has been hit worse than Latin America, which has seen three of its biggest carriers — Chile’s LATAM, Colombia’s Avianca and Mexico’s Aeromexico — crash-land, filing for bankruptcies.
4. Going Downhill
Green truck startup Nikola just can’t seem to stop its slide after it was revealed in September that a prototype truck the company showed moving on a deserted road in a 2016 video had actually been dragged to the top of a slope and was just rolling downhill. Now it turns out that a key truck design was bought from students who had created it as a college project and that the company has been censoring critics on YouTube. Oh, and did we mention the sexual harassment allegations against founder Trevor Milton, who recently left the firm? Still, GM, a stakeholder, is considering buying up even more of Nikola. I guess there’s promise in fraud too.