While global economy tanks, tech giants witness spectacular boom

The COVID-19 pandemic has been a devastating blow for the global economy. Within a few days, the pandemic pushed the entire world to the edge of a recession, severe than the 2008 crisis. With businesses shutting down, millions of people losing their jobs, this recession can leave scars that last longer even when growth resumes. 

Monzo’s annual loss doubled

Recently, the UK digital bank Monzo announced that its annual losses more than doubled from £47.2 million to £113.8 million amid its hiring spree, marketing, and US expansion. 

On top of that, reportedly the company has said instability created by COVID-19 pandemic “cast significant doubt” on its ability to continue. Later, the directors clarified “we are confident in Monzo’s ability to execute its business plan and raise capital if necessary”.

Spectacular boom during the worst months of pandemic

While the coronavirus is choking the global economy, the tech giants from Silicon Valley including Amazon, Apple, Facebook, and Google reported a spectacular boom during the worst months of the pandemic. This result came a day after lawmakers grilled the chief executives – Jeff Bezos (Amazon), Tim Cook (Apple), Mark Zuckerberg (Facebook), and Sundar Pichai (Alphabet) about their market power and business practices.

Even during the COVID-19 outbreak, the tech companies’ financial performance was remarkable – Facebook’s profit increased by 98%, Amazon sales grew 40%, Apple posted $11.25 billion (approx €9.55 billion) in profit, and the Alphabet performed better than what Wall Street expected. All four companies, combined, reported $28.6 billion (approx €24.2 billion) in quarterly net profit. Let’s have a look at the Q2 results of the Silicon Valley giants individually. 

Amazon

During the COVID-19 pandemic, Amazon surpassed Wall Street estimates with $88.9 billion (approx €75.5 billion) sales last quarter, 40% growth from last year. Furthermore, the profit doubled to $5.2 billion (approx €4.4 billion) even while the company invested in warehouse expansion and coronavirus-related expenses. The growth of Amazon’s cloud service (grew 29% to $10.8 billion) fell short of analyst expectations.

Facebook

Facebook’s second-quarter revenue grew 11% to $18.7 billion (approx €16 billion) from last year, with 89% profit to $5.2 billion (approx €4.4 billion). The result was way above analysts’ estimate of $17.3 billion (approx €14.6 billion) in revenue with a profit of $3.9 billion (approx €3.3 billion). According to the company, the number of monthly active users swelled by 12% with huge engagement levels. 

Apple

Despite the economic slowdown, people didn’t stop buying Apple’s devices or subscriptions. It seems the iPads and Macs sales were stronger, thanks to work from culture. According to the Cupertino giant, sales increased 11% to $59.7 billion (approx €50.7 billion) with a 12% increase in profit to $11.25 billion (approx €9.55 billion). 

Alphabet

Alphabet, Google’s parent company witnessed its first decline as advertisement revenue growth slowed down. The company posted revenue of $38.3 billion (approx €32.5 billion) and a profit of $6.96 billion (approx €5.91 billion), which is significantly higher than Wall Street analyst prediction. However, according to Ruth Porat, Alphabet’s chief financial officer, the advertising revenue gradually improved as the quarter went on.