COVID-19 Has Slashed Company Valuations but Brands Will Help Recovery

Covid-19 has slashed £16.7 trillion ($22 trillion) off company valuations worldwide in the first quarter of 2020, according to new data.

The research from Brand Finance, published in partnership with the International Advertising Association (IAA), found that brand value fell $116.6 to $94.8 trillion between January and April. However, since the outbreak of Covid-19, the total value of intangible assets of publicly listed companies globally hit an all-time high of $65.7 trillion in September, up 69% from April.

The new report says that brands have the power to fuel an economic recovery and should be treated like “gold or fine art”. While the global economy as a whole is forecast to contract by 4.4% this year, according to the IMF, branded companies that convey trust to consumers, such as Apple, Amazon, Microsoft, Tesla and Visa, have already bounced back from the decline caused by the Covid-19 crisis to record growth of 3.8%.

Brands are among the most valuable assets in a company, accounting for around 20% of total business value on average, according to Brand Finance.

CEO of Brand Finance, David Haigh, says: “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.

“There can be no better evidence for why brands matter than the role they have already played and will continue to play in the post-COVID recovery.”

The report surveyed 55,000 publicly listed branded companies across the world with new data coinciding with a global campaign from the IAA to highlight the importance of brands in helping fuel an economic recovery.