The world in four walls: the home trend is in! Which stocks continue to benefit greatly | message
by Ralf Witzler, Euro am Sonntag
B.During the lockdown in spring, everyday life usually took place in several places: at home, at work, in restaurants and cafes, at sports facilities, in movie theaters and in rush hour traffic. The Corona-Ma cut in one fell swoopradically took up the range of motion of millions of people worldwide. Since then, what is no longer possible elsewhere has often had to take place within one’s own four walls.
A number of companies are benefiting from this by serving the demand for more comfort, entertainment and physical activity at home. Examples are the online furniture retailer Home24, the video streaming service Netflix or the training specialist Peloton Interactive, which sells stationary bicycles for sale or rent and adds programs for home training.
At first, many assumed that the boom would not last too long for these companies. A misjudgment. Although there were easing after the nationwide slowdown in almost all economic and social activity, the restrictions are currently increasing again. With reference to increasing numbers of infections, regionally limited lockdowns and restrictions on public life are ordered. In addition, in the colder months leisure activities are shifted to their own homes anyway. Even hopes of a quick return to normal with a vaccine against Covid-19 have sunk; he will probably have to wait well into the coming year, so the retreat into his own home will continue.
Even furniture is on the Internet
The sales figures of the online trade in the furniture industry are quite manageable compared to other branches of e-commerce. At the same time, the pandemic has also given the home furnishings business a boost, which can be seen in Home24’s business figures. In the first half of the year, orders on the online trading platform increased by 45 percent compared to the same period in the previous year, sales rose by 25 percent to 221 million euros, and the operating result (EBIT) fell to seven million euros.
The significantly increased number of active customers should bring the company more business beyond the pandemic. After high investments in IT, department stores and outlets, the analysts from Bankhaus Lampe see an opportunity for Home24 to switch to more dynamic growth and expect an operating profit for the year as a whole. If you look at the ratio of company valuation to sales, Home24 proves to be very favorable with a value of 0.6 in an industry comparison.
Watch TV whenever you want
Netflix is now a brand for the modern form of television and video consumption, streaming. The company is not only benefiting from the increasing demand on the part of those who stayed at home during the Corona crisis, but is also serving the long-standing trend away from linear television towards broadcasting on demand and on demand. In addition to the United States and Canada, the US company is active with its Internet subscription services in almost all countries in the world.
In the first half of 2020, Netflix gained significant customers, especially in its lucrative home market, where, according to the Bloomberg news agency, it achieved a market penetration of around 64 percent. This is also noticeable in the business figures. JP Morgan anticipates sales growth of around 25 percent in the 2020 financial year and an increase in operating profit (EBIT) of around 60 percent.
The expansion of broadband networks and the increasing spread of internet-capable devices feed the hope that there is still scope for further growth. Experts also point to the improved profitability due to increasing income due to higher subscriber numbers while the costs for the provided content remain fairly constant.
Exercise bike for lockdown
The typical home office day offers little physical activity. Those who want sport and exercise often have a problem. Certain sports are not allowed to be practiced in the pandemic, fitness studios have strict requirements – this drives customers on the exercise bike. Peloton Interactive connects the stationary fitness bike with online spinning courses, live or on demand, all at home. Trainers lead the courses via a monitor on the bike and cheer on the athletes. Hardware, software and content come from a single source. The offer is aimed primarily at wealthy customers – since this year also in Germany as the first non-English-speaking market. Even the cheaper version of a stationary bike costs more than 2,000 euros, fees for courses must be booked additionally.
The corona crisis gave the fitness equipment specialist a powerful boost. The number of peloton members in the 2020 financial year was more than doubled to 3.1 million compared to the previous year. The number of courses booked also increased significantly. In the fourth quarter, which ended at the end of June, sales jumped to just under 130 million euros. With a profit of over 75 million euros, the company reached the black for the first time in a quarter, even if the full year ended with a loss of around 60 million euros.
Peloton benefits from an extremely high level of customer loyalty, which is reflected in the bounce rate that is important for the industry reads below one percent per month. The key figure indicates how many customers are giving up on the stock. In addition, there are certainly opportunities for Peloton to broaden the sales base, which it is already using in part. The offer is expanded to include gymnastics or yoga courses and accessories for various sports are sold. In addition to bicycles, as in the USA, treadmills and corresponding courses could also be offered in Great Britain or Germany.
INVESTOR INFO
The leisure behavior of many people, which changed during the pandemic, has brought Netflix significant customer growth and increasing revenues. Since the cost of the content has barely increased, the company’s profitability has improved. The shift from linear television to on-demand videos and the expansion of broadband networks should further fuel the development of the company and the share.
The combination of software, hardware and content at a sophisticated level binds customers and allows them to access the courses offered more and more frequently. The potential to expand the business with additional equipment, a broader range of courses, sales of accessories and through expansion into additional markets is high. However, the share has recently been very strong. Risk-minded investors use price setbacks to get started.
Online trading is becoming more mature and is encompassing industries that have so far been active on this sales channel with moderate success. Home24, the trading platform for furniture and lighting, has established itself on the market and created the conditions for stronger growth. A critical mass of active customers was gained in the Corona crisis. That is the basis for the still young company to make a profit now. Long term purchase.
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