The pandemic has changed everything for many businesses. However, some businesses are doing surprisingly well. Wall Street analysts say that strong businesses have been getting stronger, while others continue to suffer.
Interestingly, 80% of businesses listed on the S&P 500 are for third-quarter earnings, according to the New York Times. That compares favorably to the two-thirds that typically exceed quarterly expectations in an ordinary year.
Adaptable businesses have thrived
Some businesses were positioned to take advantage of the changes in the market. Amazon showed its might by being able to step up when people began ordering almost exclusively online. Not only was it already positioned to sell online, but it was also able to scale up when demand exploded.
Some mortgage companies thought they were through when the pandemic recession hit. Many homeowners were expected to default. Then, a federal regulator gave mortgage lenders financial relief. After that, many people began refinancing. One mortgage company found its revenue for the first three quarters grew by 40%.
Many large restaurant chains were able to pivot to take-out and delivery. Papa John’s pizza chain reports over 8 million new customers. On the other hand, those restaurants that could not offer delivery or pickup services have lost money. Darden Restaurants, the parent company of the Olive Garden, reported a 28% drop in sales for the three months ending in August.
Many American consumers have money to spend
It’s true that many people lost their jobs and businesses due to the pandemic recession. Yet among those who didn’t, spending in some areas is up. This is partly because outlays for travel and entertainment are down, so more money is available for other consumption.
Those in the travel and leisure industry are among those losing out. Airlines, especially, are hurting, with carriers struggling to hold down costs while being kept afloat by stimulus money. Domestic air travel is down 60% from last year.
Investors aren’t worried
Overall, the S&P 500 has grown almost 57% since March and is up 8.6% for the year. Investors expect more stimulus and for the Federal Reserve to keep interest rates low. This indicates that there is capital available for businesses with a solid plan for success in the economy as it stands today.
Unfortunately, many companies that are struggling are not traded on stock markets. The economy may not be doing as well, on the whole, as publicly traded companies.
That does not mean that there is no business being done. Now could be the time to start an agile new company or buy one that would be sound if it had sufficient capital. To get started, consulting with an experienced business law attorney is a good first step.