Post #69: Appy days - Heptagon Capital – Production

We’re all stuck at home and – admit it, you too – spending more time on our mobile handsets than we did previously. Consumers in North America spent $23bn on…

Post #69: Appy days

We’re all stuck at home and – admit it, you too – spending more time on our mobile handsets than we did previously. Consumers in North America spent $23bn on app downloads in the first quarter of the year – a new record. The figure for Q2 will almost certainly be higher. The more interesting consideration is what apps are we using most. Similarly, some apps will clearly have fallen by the wayside, given that the pandemic is clearly changing how we behave. 

Video chat and online shopping are in while real estate and anything travel or leisure related are markedly out. Begin with video conferencing. Perhaps it’s no surprise that this category tops the tables given the sheer number of people both working from home and unable to socialise with their friends. Apps in this category enjoyed an over 600% increase in downloads in Q1 and a 120%+ rise in daily active users. Take Zoom as a case in point: its worldwide user base expanded by more than 300% in just under a month.

While there is still some clear novelty in video conferencing, most social media networks already had large user bases prior to the pandemic. The more useful metric for success here would be usage. Pre-crisis, social media channels such as Instagram and Facebook accounted for ~20% of mobile app usage. By mid-March, this figure had reached 25%. Over the period tracked, daily active users rose by more than 125m on Instagram and close to 200m on Facebook (your author users the former but not the latter). Not every app can, of course, boast of such meteoric popularity. Why consider a holiday or even moving house at present? Take Airbnb. Bookings in major cities such as New York or San Francisco had already dropped by over 50% by the end of Q1 relative to the beginning. They have almost certainly fallen further since. Meanwhile Zillow, a leading US real estate business, saw close to a 25% decline in downloads in March. It may be quite some time until these trends fall into reverse. 

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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