The work-from-home trade: These tech companies could benefit from coronavirus office closures

Key Points
  • Zoom and other stocks associated with working from home are outperforming U.S. indexes this quarter as the coronavirus spreads.
Eric Yuan, CEO, Zoom Video Communications
Source: CNBC

Companies are increasingly telling employees to work from home to keep them from catching the coronavirus as more cases crop up each day.

The actions will result in a major test of technologies that enable people to work together without being in the same offices. The providers of these technologies could be grouped together for a sort of work-from-home trade coul, and  outperform the rest of the market for as long as the coronavirus remains a threat. There are more than 113,000 confirmed cases of COVID-19 as of Monday.

For example, when top executives at work-management software company Smartsheet gathered for their weekly meeting last Thursday near Seattle, eight of them logged on via video conference, CEO Mark Mader told CNBC in an interview. Usually one or two executives dial in.

"The cadence of the meeting was a little different," he said. "There was a tendency to talk over one another a little bit more. So I would say that's more of getting to understand how to communicate with one another when you're not able to read into each other's body language as clearly." Smartsheet employees use a variety of technologies for remote work, including Zoom, Slack and RingCentral, Mader said.

These and other work-from-home companies are outperforming the Dow Jones Industrial Average, which is down 9.4% for the year so far, and the S&P 500, which is down 8%.


Videoconferencing software company Zoom has been one of the biggest winners from the crisis. Its stock is up about 67% so far this year.

Zoom itself has asked employees based at its San Jose, California, headquarters to work from home, CEO Eric Yuan told analysts on a conference call after it reported earnings last Wednesday. And many businesses are having employees use Zoom for the first time because of the coronavirus, he said.

"A lot of users first time try Zoom, they say, 'Wow, it just works,'" Yuan said. That said, some users had problems logging in to Zoom for a couple of hours on Thursday, the company reported on its status page


Shares of Slack, which competes with Microsoft Teams, have risen about 11% for the year.

Twitter held its first all-hands meeting earlier using Slack and Google's Hangouts Meet product, Twitter CEO Jack Dorsey said earlier this week.


Slack employees may work from home, and the company's offices in Tokyo and Osaka, Japan, are closed until further notice, a spokesperson told CNBC. The company's technology, which had outages in 2019, has had 100% uptime so far this year.


RingCentral, a company providing cloud-based phone, video and messaging services, has seen its stock price grow 24% so far in 2020. 

Praful Shah, the company's chief strategy officer, told CNBC via email that the company has seen usage increase lately, including in China.

Hundreds of RingCentral employees in China have been working from home since early February, and earlier this week CEO Vlad Schmunis said in a companywide meeting that all employees can work from home if they wish, Shah said. Employees have been using the company's own technology to work together.


Citrix offers virtual-desktop technology that makes it possible for employees to access corporate programs when they're offsite. The company's stock is up 4.6% for the year.

Citrix is encouraging employees in Washington, Oregon and California who can work from home to do so through the end of the month, while employees based in China must work from home. Employees can work remotely using Citrix's products.

The Fort Lauderdale, Florida-based company's technologies have come in handy for some organizations that have had to deal with the virus.

"We've been working with the University of Sydney, for example," president and CEO David Henshall told CNBC in an email on Friday. "With more than 14,000 students unable to travel to Australia from China due to imposed travel bans, we've been able to help connect their China-based staff and students and provide access to the applications and data they need to continue teaching and learning from the comfort and safety of their residences."

Citrix offerings have had four service disruptions this year, according to the company's status page.


Microsoft, which fields the Teams app for voice and video calls as well as chat, is down 4.5% so far this year, outperforming peers like Alphabet, Apple and Facebook, as well as the Dow Jones Industrial Average and the S&P 500.

Although Teams accounts for a tiny part of Microsoft's revenue, which amounted to $36.9 billion in the last quarter, it's part of the company's broader strategy to get customers from deploying isolated apps on employees' devices to a suite of services available from any device, anywhere, on a subscription basis.

Microsoft has seen a 500% increase in Teams meetings, calls and conferences in China since January 31, corporate vice president Jared Spataro wrote in a blog post on Thursday.

"Despite this usage increase, service has been fluid there throughout the outbreak," Spataro wrote. The company is offering businesses a six-month trial for the Office 365 E1 bundle that comes with Teams, he wrote.

On Wednesday Microsoft asked employees who can work from home to do so if they're based in Washington's Puget Sound or California's Bay Area, and several Microsoft employees posted on Twitter about how they were using Teams on Thursday.


— CNBC's Deirdre Bosa contributed to this report.

WATCH: Analyst on most exposed internet stocks as remote work increases due to COVID-19

Analyst on most exposed internet stocks as remote work increases due to COVID-19
Analyst on most exposed internet stocks as remote work increases due to COVID-19