The COVID-19 pandemic has battered the U.S. economy, but its impact has been uneven. Some companies have clearly benefited. Videoconferencing, collaboration software, home fitness, and telemedicine have all seen customer counts soar.
In addition to the well-known "stay at home" stocks, a few surprising companies could be among the biggest long-term beneficiaries of the crisis.
These three businesses have successfully built long-term revenue growth during 2020 and, as a result, could be huge winners in the post-pandemic world.
Tremendous brand power with a new and long-tailed revenue source
I've called Disney (NYSE:DIS) the ultimate combination of a "reopening" stock and "stay at home" stock. When the pandemic ends, demand for Disney's offerings will be as strong as ever. Consumers will still pack into its theme parks, fill theaters to see its billion-dollar blockbusters, and board its cruise ships.
Disney has also built a long-tailed recurring revenue stream in the form of its Disney+ streaming service. Launched in October 2019, Disney+ couldn't have had better timing. Stuck-at-home consumers flocked to the service's massive library of popular media assets such that the company met its five-year subscriber goals in its first year. Disney+ ended the third quarter with 74 million paid subscribers. This is a revenue stream that will continue long after the pandemic ends.
The pandemic could actually end up being a net positive for Disney's revenue. Its core businesses will eventually return to normal in terms of revenue generation. Disney+ will add billions of dollars in subscription revenue on top of it.
Massive e-commerce potential that's largely untapped
Unlike more mature social media platforms, Pinterest (NYSE:PINS) could still have tons of room to grow and monetize its user base. The pandemic has shown that Pinterest's business is resilient. It's also helped the company dramatically increase its user base, which could translate into big profits down the road.
As the coronavirus outbreak worsened and people no longer had the option to browse at stores, craft markets, and other in-person venues, millions of people gravitated toward Pinterest's platform. In fact, since mid-2019, Pinterest has added a total of 142 million new users, including 26 million during the third quarter alone. International growth was particularly impressive.
This gives Pinterest a monthly active user (MAU) base of about 442 million people. This may sound like a lot, and it is, but it's less than one-sixth of Facebook's MAUs. Pinterest is still in the early stages of monetization, especially with its international users (which generate just over 5% of what the average U.S. user does) and in terms of e-commerce potential. As a "visual discovery" tool, Pinterest is a natural fit for the massive world of e-commerce, which the company is just starting to explore.
The pandemic gave this fintech giant a massive user base
Fintech giant Square (NYSE:SQ) certainly saw a nice boost during the pandemic. Revenue jumped by 140% year over year to more than $3 billion for the quarter, and gross profit growth accelerated to its highest level ever. Still, there's plenty of room for more.
While Square's core payment processing business remains strong, the real story during the pandemic has been the Cash App ecosystem. The company recently said that Cash App users roughly doubled from the same time last year. While Square has done a great job of monetizing Cash App, it's still in the early stages.
Square has said that it wants the platform to be a one-stop personal finance shop. It recently rolled out the ability to buy and sell stocks. It's rumored to be in talks to acquire Credit Karma's tax-prep business. It could eventually offer products like high-yield savings accounts and personal lending. In short, Square has a ton of expansion potential within the Cash App and tens of millions of users to cross-sell new products and services to.
The post-pandemic tailwinds aren't just on the consumer side, however. Square has seen impressive growth in its Online Store and other omnichannel-focused offerings, and the company's merchants are seeing the value in e-commerce more than ever.
It will take years for these pandemic tailwinds to play out
One key takeaway is that unlike some of 2020's highest-flying stocks -- such as Zoom, Teladoc Health, and Peloton -- these three stocks aren't seeing their pandemic-era tailwinds reflected in their revenue and earnings figures right away.