Covid-19 slashes company valuations but brands can aid recovery
Company valuations worldwide collectively took a £16.7tn ($22tn) hit in the first quarter of 2020, as Covid-19 wrought havoc on businesses.
Brand valuations slumped in 2020, though companies like Mastercard and Apple have already recovered.
Brand Finance surveyed 55,000 publicly listed branded companies, in partnership with the International Advertising Association (IAA), concluding that brand value as a whole slumped $116.6 to $94.8tn between January and April.
The fall contrasts with a 69% surge of intangible assets of publicly listed companies worldwide since April, which stood at $65.7tn in September.
Companies are losing value
-
Why Brands Matter 2020 argues that household names in the corporate world are the key to sparking an economic recovery, arguing that big-name brands should be treated like ’gold or fine art’.
-
This confidence is borne out by figures showing that tentpole companies such as Apple, Amazon, Microsoft, Tesla and Visa have already recovered from a Covid-19 dip to post growth of 3.8%.
-
Such a turnaround is even more remarkable in the context of a global economy which is still languishing in the doldrums, with the latest IMF forecast projecting a contraction of 4.4%.
-
Today brand names are among the valuable assets a company has, according to the report, accounting for approximately 20% of total business value on average.
Brands are a ‘powerful tool for economic revival’
-
Brand Finance chief executive officer, David Haigh, said: “In times of crisis, brands – especially those most valuable and strongest in their categories and markets – become a safe-haven for capital. Like gold or fine art during past economic downturns, nowadays well-managed, innovative, and reputable brands are what the global economy turns to in the hour of need.“
-
Such praise found echo in IAA managing director of Dagmara Szulce who adds: “Brands are a powerful tool for economic revival, allowing consumers to quickly identify the companies and products they like or differentiate between them.
-
"Brands are there to protect consumers from the risks that are posed from unregulated, illegal and counterfeit products, giving consumers peace of mind in their purchasing decisions.”