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The Financial Times is currently running a series looking at the effect of the pandemic on various companies. Given the fact that there is so much gloom and doom around, it is reassuring to some extent to know that some businesses are prospering in the very changed conditions in which they now find themselves. This is a pleasant reminder that despite the fact that many businesses and sectors are struggling greatly as a result of the pandemic, there are still some success stories around. Many of the businesses covered in the survey are well-known household names (though not all of them). Looking at how they have prospered also prompts us to think about how the world is changing because of the pandemic and how business practices need to adapt to keep up with those changes.

The FT survey's criteria for measuring success is the size of the market capitalisation of the businesses involved. This is admittedly to some extent a blunt instrument as far as a measurement indicator is concerned. Market capitalizations are all about perceptions as much as realities. Many analysts are surprised that in relative terms stock markets have remained reasonably robust during the pandemic and some even suggest that this might be something of a 'bubble'. The results of the survey suggests that some market sectors are doing particularly well. These include information technology, communication services, healthcare and discretionary consumer items involving companies such as Amazon. The survey though digs deeper and looks at the performance of individual companies and how well they have managed so far.

I suspect that not many readers will be surprised to hear that Amazon is top of the list. Since the start of the pandemic the company has added over $400 billion to its market capitalization. Across the globe consumers have turned to Amazon as a supplier of first resort given the fact that many shops have been temporarily shut. As a result Amazon staffing levels have been increased and revenues have rocketed, though so also have costs. Chief executive Jeff Bezos warned that as much as $4 billion could be required for virus mitigation measures, which ironically has pushed Amazon into its first quarterly loss since 2015. The market however seems largely unworried by such details given the way in which Amazon's future seems to have been assured by the increased reliance placed on it by so many consumers in so many different countries.

Microsoft has also benefitted. It's 'Teams' product has done particularly well out of the pandemic. In late 2019 its daily use involved around 20 million people. By April 2020 that figure had increased to 75 million. It has also benefited from increased use of its gaming products, and this introduces one sector that is perhaps an overlooked beneficiary of the pandemic. Gaming generally has performed well economically in the pandemic. For example in 5th place in the survey was Tencent, an online gaming service based in China. Demand for its games has shot up as consumers in many countries find themselves with far more time on their hands than was previously the case. Microsoft's capitalization has increased by about $270 billion during the pandemic, whilst in 3rd place in the survey is another very well-known international name Apple, which has seen its capitalisation go up by about $219 billion.

Sandwiched between Apple and Tencent in 4th place is Tesla. The drive towards more environmentally friendly cars (if readers will pardon the punů) has gained a great deal of momentum recently. Tesla appears to have gained a significant head start in the race over its rivals who are struggling to keep up. On 1 May 2020, Chief executive Elon Musk expressed the opinion that Tesla's stock price was too high. Since then it has gone up even further. Its capitalisation has increased by over $108 billion during the pandemic.

With the exception of Tesla, all of the top five companies who have seen their capitalisation improve during the pandemic have one thing in common; they are all involved in one way or another in activities which are performed and delivered digitally (as indeed are many other companies lower down the survey list whose capitalisation is up). Companies such as these have benefitted in particular from the fact that international tax frameworks are largely developed to reflect realities in another world which no longer exists where tax bills were calculated based on where companies physically traded. There is increasing pressure internationally to address anomalies in the international tax system to ensure that digital suppliers provide what is deemed to be a fair share of tax revenues out of their profits. Given the fact that the world and its many and myriad governments will need to find revenues to help rebuild shattered economies, this is likely to be a point of increasing interest as time goes by.

Wayne Bartlett is an author for accountingcpd. To see his courses, click here.

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