How the Shutdown is Driving Millennial Investing Themes

Core Thesis and Background

• The fundamental equity team has spent the last five years investing in companies benefiting from millennial consumer behavior, a cohort of 2.3 billion people entering their prime earning years globally.
• Pre-pandemic trends identified include tech-enabled consumption (e-commerce, streaming, gaming) and a shift in priorities toward wellness, experiences over physical goods, and sustainability.

Pandemic-Driven Behavioral Acceleration

• Forced lockdowns affected approximately one-third of the global population, compelling adoption of "millennial-like" online behaviors across all age groups, including first-time online shoppers and remote students.
• E-commerce penetration, previously at 11% globally (ranging as low as 4% in Italy), has seen accelerated adoption due to lockdown constraints.
• Shopify reported daily Black Friday-level sales and traffic volumes since the onset of the pandemic.
• Snapchat recorded a 20% increase in daily active users and a 20% decline in engagement per user during the early pandemic period.
• Facebook experienced similar usage shifts, particularly among users over age 35 adopting previously youth-centric platforms.

Streaming and Entertainment Metrics

• Disney+ reached 50 million subscribers within five months of launch, a milestone Netflix required seven years to achieve, driven by families utilizing the platform for child entertainment.
• The team anticipates that while some online usage will decrease post-pandemic, the convenience gained will keep penetration levels elevated long-term.

Future Spending Trends and Sector Outlook

• Despite lockdown disruptions to travel, dining, and live events, the team expects "pent-up demand" to drive a rebound in experiential spending, citing human nature's social requirements as unchanged.
• Success in the experiences sector will depend on company liquidity to survive the lockdown period; survivors are positioned for significant growth.

Evolving Millennial Demographics and Investment Themes

• Parenthood and Health: As millennials form families, investment focus is shifting toward the intersection of parenthood and healthy living, specifically baby foods and genomics-driven healthcare advances.
• Digital Workforce: Projections that millennials would comprise 75% of the global workforce by 2025 have been validated by immediate remote work adoption; companies like Slack, Zoom (reaching 300 million users), and Microsoft Teams report massive usage spikes.
• Sustainability: Consumer demand for value-aligned products continues to pressure corporations on environmental issues, with a notable shift away from plastic toward aluminum packaging (75% of aluminum packaging is recycled; 75% of new drinks use aluminum cans last year).

Forward-Looking Statements and Decisions

• The team remains positive on long-term sustainability trends, hypothesizing that the visible environmental improvements (e.g., reduced pollution) during the economic slowdown will strengthen public commitment to green initiatives.
• Investment strategy focuses on identifying corporate beneficiaries of these accelerated behavioral shifts rather than betting on the temporary nature of the pandemic itself.