how will technology stocks be impacted during a recession

It’s no secret.

The pandemic has changed the way we socialize, work, interact, and even celebrate special occasions like birthdays and graduations. Aside from that, technology continues to thrive in this climate and I don’t think it’s changing any time soon.

Think about it — your kids are at home completing their school online, while you’re streaming all of your favorite shows on television, and having virtual happy hours with your friends and family. It’s probably fair to say that your usage of technology devices have increased, which as a result, have driven certain tech stocks up.

For example, Zoom Video has benefited from the work from home trend since the shelter-at-home orders were executed. Zoom stock has gained roughly 17% since February, and its daily active users have increased from 10M in December to 200M in March. Some could imagine that once stay at home orders are lifted, Zoom may see its revenue decrease (which may happen), but consumers might continue this model due to safety concerns and personal choice of their employees. Okta and Netflix are also viable players — read more here.

We cannot predict how long this shutdown will last as some analysts foresee a recession on the horizon. If this happens, not all companies (including tech) will recover. If we take notes from the Great Recession (2007-2009), anything is liable to happen which is why you should always consider a company’s balance sheet when making investment decisions.

Here’s a great snippet from CNBC prior to the COVID-19 crisis:

"Tech giants with strong balance sheets have seen their stock prices soar: Since the last recession ended in July 2009, Apple is up almost 900%, Amazon more than 2,000%, and Microsoft — once seen as hopelessly out of touch — is up more than 400%. Smaller companies with lower profits but enviable revenue growth have also done well, like Salesforce (up more than 1,400%) and Netflix (more than 5,000%)."

Yeah, that part.

I’m no stock broker or financial advisor, but if you are feeling regret for not investing during our last recession, take the time to educate yourself on past trends and companies that have lived through chaotic and uncertain times. If you’re able to do so, seize the opportunity of capitalizing off of this market (I repeat, if you can!) and understand that most stocks are a long-term gain. Because trust me, this too shall pass.

If you're new to the investment game, here's a list of 15 best investment apps for everyday investors. Whether you use this list or just do a simple search on Google -- good luck!

Be blessed, be safe, and be kind.

-btg