Since the coronavirus crisis started, masks became the indispensable accessory for the people. In a matter of days its consumption reached levels never seen before. The shares of the producing companies, on the other hand, also registered a significant increase.
This is mainly due to a higher level of interest from investment funds. Since the start of the year, companies like Allied Healthcare Products and Alpha Pro Tech have grown 874% and 300% respectively.
Edison Nation, a business group that encourages innovation and drives intellectual property, media and consumer products that recently won a disinfectants and masks contract, posted an increase of more than 14%. The actions of Lakeland Industries, the manufacturer of protective clothing, increased 29% this year.
Stock evolution of Allied Healthcare and Alpha Pro.
However, not all companies related to personal protective equipment were so lucky. In particular, 3M, Kimberly-Clark and Honeywell International they decreased between 0.41% and 27%.
Today, it can be said that the facial mask has become an inelastic good, whose quantity demanded does not vary when changing prices. As a result, both manufacturers and wholesalers decided to take advantage of the moment and increased prices. The situation is likely to change once the quarantine is over, but we are still far from returning to normal.
Comparative evolution of companies involved in the manufacture of masks.
The rest of the market players also decided to take advantage of the situation. Disney announced the sale face masks with Anna and Elsa, Woody and Buzz Lightyear and Baby Yoda, among other characters. Sports leagues like the NBA and NFL also started selling face masks with team logos. Another American company offers a monthly subscription for reusable face masks.
For now, most of these companies are donating all or part of their mask sales to charities. But, over time, that approach could change as such masks become a daily habit.
At the same time, it’s important to note that if consumers wear masks with logos, it’s essentially free advertising for the brands behind them.
*** Igor Kuchma is an analyst at Trading View.
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