How Tech Companies are Benefitting from the New Remote Working Model
Promoted by IG
The new work from home model is changing the way we work, shop, and live our lives. After all, official estimates suggest that working from home fundamentally alters the way we interact with the world around us. If we take Sydney alone as an example, it’s thought that a significant downturn in the retail, arts and hospitality industries caused by people working from home will cost Sydney’s central business district $10 billion this year alone.
As a result, it’s undoubted that this change represents a fundamental shift in the Australian economy. After all, in 2019, Sydney’s central business district alone generated $140 billion for the economy. This not only represents 20% of the state’s economic output, but it also represents 7% of Australia’s gross domestic product as a whole. As a result, worldwide, some market analysts have predicted that such a drop in revenue from the high street will cause the GDP of advanced economies to fall by 7% on average this year. Plus, the World Bank believes a 5.2% decline in global GDP will cause the deepest global recession since World War Two.
However, although the new work from home model is causing a great deal of economic uncertainty in city centres, it’s actually causing opportunities in other sectors, such as tech. This is because many Australians are finding that not only are tech companies important for facilitating this new way of working, but they’re also transforming the way that we pay for goods and services.
Which Companies are Benefitting from the Work from Home Model?
Those involved in options trading in Australia have recently seen sharp movements in the Australia 200 price chart, which has risen rapidly throughout November. At the start of the month, the index had dipped below the 6,000 mark, but by the end of the November, it had passed the 6,600 level of resistance. It’s the first time the index had passed this price level since this time last year.
Although the index as a whole is performing well, it’s clear to see that tech constituents, in particular, are leading the charge. For example, Altium Ltd, which is a software company that creates digital tools for designers, has risen from lows of $25.74 per share back in March 2020 to highs of almost $40 per share in October. This means the company now has a market cap of over $4.7 billion.
The share price of Afterpay Limited has also skyrocketed. The fintech company’s stock price plummeted below $15 per share back in March, but now investors have seen the price per share regularly break above the $100 barrier in October and November. This is because the company has been a key player in improving the financial industry and allowing customers to pay for goods online while they’ve been working from home.
Both of these companies have seen considerable stock price rises throughout 2020 because they’ve been able to prove to the market that they’re offering a service that facilitates working from home (in the case of Altium Ltd). This is by improving the quality of life for Australian citizens, who are spending more time than ever at home by improving their ability to source and pay for goods they need (in the case of Afterpay Limited).
By contrast, companies who have not adapted to this new and flexible way of working are struggling. For example, Super Retail Group Ltd who are still heavily reliant on physical premises and manufacturing company GUD Holdings have been among the index’s biggest losers throughout November. As a result, it’s clear that companies like this need to readdress their business model if they wish to benefit financially from the new ways of working.
Which Companies Will Benefit in 2021?
Looking to the future, it’s clear that nimble and agile businesses look set to benefit from this new way of working. So, expect technology companies, fintech start-ups and online meeting providers to continue to be beneficiaries of the work from home model.
However, companies that show their adaptability and lower their reliance on the traditional high street will likely also benefit. So, expect several ‘traditional’ high street retailers to look online as a way of improving business, as the creation of mail-order products and e-stores will diversify revenue streams and capture the attention of those who are working from home rather than populating the high street.