Influencers: The leaders of the forthcoming Tech Revolution

We start to see the light at the end of the pandemic, but we may not realize yet that the end of the COVID signals the beginning of a new era. We are in the middle of a technological revolution, maybe the biggest that occurred since the Victorian era.

Who are the leaders of this revolution? Do they look more like Marat or Saint-Just? Are they as charismatic as Cromwell or as popular as George Washington?

After two months of lockdown, new words made their place in our day to day vocabulary: Zoom, Whereby, Vimeo, TikTok, OnlyFans, Houseparty, Netflix... The societal mutations resulting from the pandemic opened the gate to the information revolution. Technology disrupted some sectors including supply chain, banking, event planning and most office jobs.  The traditional economic sectors that flourished with the last industrial revolution will be the first victims. Since, the second world war, production growth was the main parameter of a country’s economic health. Therefore, all sectors that relied on growth and leverage are the big losers of the pandemic.
But, the information revolution has also some structural winners. They are mainly the web-based companies providing dematerialized services. The number of technology firms will increase dramatically in the next 12 months, and the competition will be fierce.

The main challenges for newcomers are to build a name and a reputation. But, in a virtualized economic environment, this becomes a big challenge. In this context, influencers, podcast hosts, vloggers have the upper hand. Start-ups and new market entrants could have no other option than to popularize their products with such web personalities. Thus, influencers could become the new leaders of the industrial revolution.  

We need some great character who could captivate the people... someone wise who could direct the actions of an unbridled and floating multitude.
Jean-Paul Marat, French poet and revolutionary

Market overview

Since the beginning of the pandemic, the Dow Jones dipped by more than 12%, while NASDAQ lost only 3%.  Hi-tech firms are seemingly doing much better than the rest of the world. Pharma and tech are the big winners of this crisis. While pharma surfed the fear wave, technology firms filled the gap left in the real economy by the global lockdown. Groceries delivery services, virtual work tools, banking services, online onboarding, adult entertainment are only a few examples of activities where technology took massively over during the pandemic.

Moreover, tech companies gained a strategic position in many sectors.  Economic mutations empowered the technology sector. If a significant financial crisis does not occur, we could witness a significant increase in the number and size of technology start-ups.

Focus:

Spotify and JRE

It looks like the transfer seasons for influencers and social media personalities is open.

Spotify acquired the exclusive rights to the Joe Rogan Experience podcast in a multi-year agreement worth more than 100 million USD: The reputed comedian and UFC commentator distributed his podcast until recently through Youtube. Youtube remunerates the seminal content creators substantially, but the income is highly variable. Moreover, Youtube does not put any trademark value on the vlogger.

Thus, Youtube's model is short-term, and as a content creator, you are as good as your last numbers are. Spotify's deal with JRE is a game-changer as it puts a goodwill value on a podcast and brings a long-term perspective. It will become a trend in social media, and the major players will start signing the big stars of the web to consolidate their positions. Youtube may soon need to pay exclusivity rights to popular channels like Dude Perfect and Logan Paul or more niche like Wes Watson.

Focus:

Amazon is a long-term structural winner

It is easy to dissect the reasons why most listed companies saw their capitalisations plummeting amid the COVID crisis. Understanding how very few firms consolidated their position during the crisis becomes a bigger challenge. Amazon is such an example. Amazon's share gained 27% since the beginning of the year, and the raise is not conjunctural.  

The pandemic hammered the last nail in the coffin of traditional commerce, and Amazon had the right tools to scale-up its operations to take over the markets affected by the lockdown. Therefore, Amazon is a structural winner of the crisis, thereby being in a stronger position compared to its peers. Bezos’s company sits right now on a stack of cash and will take for sure the opportunity to go into new businesses and buy distress assets. Amazon, will be bigger than the Roman empire!

Social media:

Fight to survive

US President Donald Trump has signed on Friday an executive order aimed at removing some of the legal protections given to social media platforms. The White House believes that companies like Twitter and Facebook have "unchecked power" to censure and edit the views of users.

The market reacted promptly, Facebook and Twitter plummeting the last three days by 6% and 8% respectively. With the 2020 US elections approaching, the big social media companies could enter a period of high volatility. Wall Street understood that despite his controversial behaviour, Trump was good for the stock market. Why they should support somebody that tackles the person that brought the S&P500 at its historical maxima?

Market outlook

As predicted, the Gold ounce and the Brent crude oil remained into positive territory. The decoupling between the stock market and the real economy did not reach to an end. The likelihood to see a Dow Jones below 20,000 is lower than it was 1 month ago. The closer the Dow Jones gets towards the resistance level of 27,000, the lower is the probability of witnessing a second big dip. A big decrease in the number of  new COVID patients can bring further support to the price signal.