What happened
News that vaccine-maker Moderna Inc. has a (probably) successful vaccine candidate to prevent the SARS-CoV-19 coronavirus sent stock markets flying on Monday. By close of trading, the S&P 500 Index had scored a 3.5% gain.
Surprisingly, some of the stocks enjoying some of the biggest gains today, though, were ones that might not benefit much from the end of the pandemic -- indeed, they might lose some of the advantages they gained from it.
In trading earlier today, shares of DVR-maker TiVo Corporation (TIVO +0.00%), of 3D printer-maker Stratasys (SSYS +0.23%), and robo-vacuum manufacturer iRobot (IRBT +0.00%) all gained roughly 10% or more, and held onto most of those gains throughout the day.
By 4 p.m., TiVo ended with a 7.6% gain, while both Stratasys and iRobot ended up 9.1%.
Image source: Getty Images.
So what
So why do I think the end of the pandemic might not be unalloyed great news for these stocks? Call it a hunch, but it does seem to me that the more people stuck at home under stay-at-home orders, the greater the demand would logically be for TV-watching equipment such as TiVo makes.
Similarly, the longer upper-income households remain under quarantine, with outside workers such as housekeepers unable to visit, the more Roombas iRobot might sell to help out with the vacuuming. And we've all seen the stories about how tech-savvy households did their part in the early days of the pandemic, turning their home 3-D printers into mini-factories for the production of face shields for front-line healthcare workers. In the absence of a pandemic, that trend is likely to go away, and that could mean lessened sales of 3D printer "ink" for Stratasys.
In short, each of these three companies, it seems to me, was positioned pretty well to outperform the market in a long-term socially distanced economy. Their outperformance wouldn't have been immediate, of course. Indeed, Stratasys and iRobot both saw sales decline in the first quarter of coronavirus, while TiVo's sales gained only 1%. But given time to adapt to the situation, I think they would have found their "sea legs" and begun leaving the rest of the market behind.
Will the end of coronavirus cut that prospect short?
Now what
Maybe, but also maybe not. After all, Moderna's (and others') vaccine candidate is only just in Phase 1 clinical trials now. Actual FDA approval of the treatment is still probably months, if not a year or more, away -- if the vaccine is even ever approved. And then it has to be manufactured, distributed, and administered to tens of millions of people, adding more months to the process. And than those who receive the vaccine need time to convince themselves that it "worked."
That's months, or years, in which the U.S. economy will continue to evolve. Perhaps it will return to "normal," but also, perhaps, not. Once burned twice shy, I say, and if you ask me, I think America as a whole is going to be a lot more cautious in the months and years ahead. Consumers will continue to don masks to visit the grocery store. Companies will be more lenient in their work-from-home policies -- or even encourage the practice.
I could certainly be wrong about this, but it seems to me that whether Moderna's vaccine proves to be the silver bullet that kills coronavirus or not, the world of the future is going to be one that will favor companies like TiVo, Stratasys, and iRobot -- and I think the investors who bought back into these stocks today may turn out to be right, even if for the wrong reason.
