Internet companies are likely to be long-term winners from the pandemic as lockdown measures have now lasted long enough for changes in consumer behavior to become permanent, according to Credit Suisse.<\/p>\n
\u201cIt takes 66 days for a change in behavior to turn into a habit,\u201d and \u201cwe are now well into the time frame for consumer behaviors learned during quarantine to become lasting habits,\u201d the firm wrote.<\/p>\n
Analyst Stephen Ju singled out social-media companies as among those that would likely benefit from this tailwind, echoing a growing consensus that has been made elsewhere about e-commerce names.<\/p>\n
As part of its call, Credit Suisse raised its price targets on Facebook, Snap, Pinterest and Google-parent Alphabet, all of which derive most of their revenue from digital advertising.<\/p>\n
\u201cOne of the biggest questions facing investors is \u2018will it stick\u2019 in terms of app engagement\u201d and online purchasing behavior, the firm wrote.<\/p>\n
The length of the lockdown is \u201ca clear signal that the acceleration in queries, time spent, and e-commerce purchasing should be growing and hopefully accelerating from a higher baseline.\u201d<\/p>\n
The firm cited a Google Cloud Next session for the statistic about 66 days.<\/p>\n
The First Trust Dow Jones Internet Index Fund, an exchange-traded fund that tracks Internet stocks, is up more than 30% in 2020. The S&P 500 is higher by less than 1%.<\/p>\n
Credit Suisse\u2019s comments mirror a recent report from Jefferies about e-commerce stocks.<\/p>\n
\u201cBehavioral changes brought about by the pandemic have permanently increased online consumption,\u201d the firm wrote, adding that e-commerce traffic \u201chas remained robust even after states began reopening.\u201d<\/p>\n
Earlier this month, Bloomberg Intelligence calculated that the penetration of digital US retail sales \u201ccould double by 2024,\u201d a trend accelerated by coronavirus-related store closings.<\/p>\n
Citi also expects online retail will continue to gain share. While total US retail sales \u201care expected to be only 1% above 2019 levels\u201d in 2022, \u201ce-commerce is expected to increase 43%,\u201d while brick-and-mortar retail falls 4%, the firm wrote, citing eMarketer forecasts.<\/p>\n