Thematic Disruption Accelerates & Expands Amid COVID-19 Pandemic

Long term structural trends, by definition, take time. The development and adoption of new technologies, the changes in deeply-ingrained consumer behaviors, or the materialization of demographic shifts don’t happen overnight. Yet certain events can prove to be either an accelerant or retardant to their adoption.

By and large, the COVID-19 pandemic is proving to be an accelerant for many long-term structural trends. With widespread concerns around public health and global economic growth, consumers, companies, students, and governments are all rapidly adapting their behaviors to cope with these new realities. Many of these shifts involve leveraging the latest technologies to make stay-at-home orders more palatable. This includes utilizing video-conferencing for work, school, and doctor’s visits, enjoying streaming and gaming platforms for entertainment, connecting with friends and family on social media networks, and shopping for goods online rather than in-store. Outside of our homes, we’re seeing widespread changes as well. A greater emphasis on robotics & automation is helping reduce the need for human contact in places like hospitals, warehouses, and factories. Within the health care space, revolutionary genomics-based testing and treatments are gaining steam as researchers scramble to combat the virus.

COVID-19 is not just accelerating the adoption of these technologies, but also expanding their potential markets. E-commerce sites, for example, rarely considered the Silent Generation (those born between 1928 – 1945) as their target audience. Yet seniors are among the most vulnerable to the disease and amid lockdown orders are learning how to order basic food, home goods, and medicine online. Similarly, video conferencing and social media apps often target younger audiences but are quickly realizing that older generations are increasingly using their technologies to maintain social connections.

In thematic investing, we often attempt to assess a theme by plotting it along an adoption curve – an expected trajectory of adoption and the market potential for a particular theme. As demonstrated below, we show how COVID-19 is likely both steepening the curve and shifting it upwards as certain themes are both accelerating and expanding due to the viral outbreak.

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