In Focus: Work From Home is Far From Over
First A Story, "Change is Tough"
“Just email me,” said the clerk to another clerk. “Bet,” the other clerk responded. “Why don’t you just walk over to his department and talk to him about the issue,” asked the clerk’s manager, “I don’t get you all and this email stuff, it’s just easier to talk face-to-face” the manager added.
That was a conversation had all over the world in the mid to late 90’s. How we communicated was changing during that time, it was becoming quicker, but there was an old guard, a population of people that didn’t want to adapt, they wanted to talk face-to-face, even when an email would suffice.
This change is happening again. There are people in the workforce who are exhausted by Zoom Meetings and Google Meets, and have bitched, moaned, and complained about the day when they can get back into the office. But there’s a population that is being shaped by the work-from-home and learn-from-home experiment. They not only embrace it, they love it. This population will usher in the permanent work-from-home and learn from home movement as their influence in the workplace grows.
Why is this Important to Investors
Over the past few weeks the world has received positive news from Pfizer (PFE) and Moderna (MRNA) regarding their COVID-19 vaccines, and with each of those reports the work-from-home stocks took a slight dip in price.
On November 6, 2020, a few days preceding the Pfizer announcement Zoom Video (ZM) closed at $500.11 per share. On November 9 the day of Pfizer's announcement Zoom gapped down and opened trading at $433.00 per share. The selling pressure pushed the stock down to as low as $402 per share on the day.
A similar situation occurred with Chegg (CHGG), a winner for investors in the learn-from-home space. Chegg closed trading on November 6 at $77.23 per share, the stock gapped down on the 9th of November to $71.51, dropping 7% on the Pfizer news.
Investors have been quick to move their money from the work-from-home and learn-from-home space on any good news of a possible vaccine, but I don't think this is a wise move for the long-term investor.
We're Getting Better at Being Apart
Social media changed things, it gets a bad rap, some of it itdeserves, but a lot of it is on us. But moving away from the bad, social media added another layer of things to do with your computer, it made the computer a communication device for people who weren't computer scientists. Even before Facebook, Instagram, Twitter, Tok Tock, and SnapChat, there was AOL Instant Messenger (AIM) and Yahoo's instant messenger, and both started connecting non-computery people digitally.
In the days before every kid was able to own a smartphone, teenagers were using AIM and Yahoo Instant messenger to connect with their friends and peers. Instant messengers morphed into social media platforms, and smart phones allowed us to have access to those platforms at all times, Twitter is just AIM on acid. With every new advancement in digital communication, we get a little more comfortable with non face-to-face communication.
But Everybody is Dying to Get Back to Work
Yes, there are a lot of people complaining that it isn't the same, and that they miss the interaction, and they miss being in the office, and they miss being away from their spouse and kids for some time during the day. But investors should keep in mind that the reason we don't hear from the people who like working from home is because they're not complaining.
I've talked to people on both sides of the spectrum, those that feel less productive at home and others that feel even more productive working from home. Those that miss the camaraderie formed at the office, and those that are ecstatic about the money they've saved working from home, and hope to continue doing so.The main difference I've noticed between the two sides is that those who are over the work-from-home experiment have been more vocal about their desire to get back into the office, but the loudest voice doesn't necessarily speak for everyone.
I believe that we've grown more accustomed to the digital buffers we have in our life, than we care to admit to ourselves and others.
What Does the Money Say?
The money says that it's okay with people working from home. Earnings from America's best companies continue to be strong - even to my disbelief - and investors continue to bid up the stock prices of these companies that continue to show strong earnings in 2020. Companies have adapted and found ways to be productive and thrive in a work-from-home environment.
I read where a person in charge of securing business deals for a small biotech company went from spending three days to close a business deal or partnership deal down to five or six hours to close deals via Zoom. Gone are the two flights to the destination and back, gone are the hotel stays, gone are the expensed dinners. Now it's just him, his counterpart from the other company on a Zoom call with no distractions, talking to see if a deal makes sense and then doing the deal.
This new way of doing business equates to thousands of dollars saved for this small biotech firm. For an S&P 500 company that's millions of dollars a year being moved from the cost of revenue line down to the operating profits line on an income statement, and that's a big win for investors.
Also, for the part of the person in charge of business deals for the biotech firm. Going from three days to close a deal down to five or six hours, gives him an additional two days to work on securing more deals.
Don't Be a YoYo
The markets and certain stocks have yo-yo’d off of news regarding a COVID-19 vaccine. Investors believe that once the vaccine is here, approved, and deemed safe and efficient people will ditch their couches and Netflix binge sessions for late nights out with friends and family. I share the belief that certain companies are going to explode with business when we beat COVID-19, but I’m not writing off Zoom, Slack, and other work-from-home and learn-from-home stocks, and neither should you. I'm not saying that everyone will permanently work from home forever, but I do see it being an option in many work places going forward, and an option many employees will exercise.
Working-from-home and learning-from-home has exposed some gaps in our infrastructure, and I expect the great minds of Silicon Valley, Wall Street, and other places to plug those gaps in the coming years. I would suggest that investors not forget about work-from-home and learn-from-home stocks as we get closer to a vaccine, but instead start looking for the next generation of these companies.