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Today we look at stocks that reinvented themselves with complete success. Although many listed companies are several decades old, virtually all have had to reinvent themselves in one way or another to stay relevant. And in this article, we recap the most successful case studies.
For the record, we are not talking about companies like Disney that have expanded into new areas but still retained some core features of their old businesses. Not companies like most automakers that are still automakers but pivoting from diesel to electric vehicles. Not even companies like Adobe that sell the same product category but have pivoted revenue models from permanent packages to monthly subscriptions.
We are talking about stocks that are completely different to what they once were.
5 stocks that reinvented themselves successfully
1. Netflix (NDQ:NFLX)
Netflix is the perfect example of a company that successfully reinvented itself. When it first launched in 1997, Netflix was a DVD rental-by-mail service, competing with the likes of Blockbuster (which had the chance to buy Netflix on a silver platter but notably turned it down).
However, as streaming services gained popularity, Netflix shifted its focus to digital content delivery and original programming at the same time competitors did literally nothing but remind themselves it was just 1, 2, 3, 4, 5% of the market. This shift has propelled the company’s growth and cemented its position as a leader in the entertainment industry. Although it faces significant competition, it retains a solid market position as a first mover.
2. Microsoft Corporation (NASDAQ: MSFT)
This company has transformed from a software-focused company to a diversified technology giant. In the 1990s, Microsoft was synonymous with its Windows operating system and Office suite of productivity tools. However, as consumer preferences shifted towards mobile devices and cloud-based services, the company faced declining revenues and market share. In response, Microsoft underwent a significant transformation under the leadership of Satya Nadella, shifting its focus to cloud computing and artificial intelligence. This strategy has paid off, with Microsoft’s stock price jumping over 600% since Nadella took the helm in 2014.
3. American Express (NYSE:AXP)
American Express is a less familiar reinvention story, but a good one nonetheless. Back when it was founded in 1850, when it was a transportation company for valuable goods, stock certificates and currency.
It only got into charge cards in the mid-20th century when it saw there was a need for alternatives to carrying large amounts of cash. And the rest (namely, the 100m+ credit cards used globally today) is history, beginning with 275,000 card holders on that first day of operations in October 1958.
This is a similar transformation to Microsoft. For so long, IBM had been a major manufacturer of computing machines and equipment. A whopping $8bn loss in one quarter during 1993 led it to abandon hardware and focus on software.
Although it isn’t quite the monopolist behemoth it once was, it has two solid businesses – one focused on cloud computing and AI, the other providing managed IT services.
5. Slack (NYSE:WORK)
This is a very recent example of a successful reinvention. It began as a company called Tiny Speck that made a computer game called Glitch. Although the game was unsuccessful, one feature stood out. Namely, the interactive chat functionality that players used.
And so in 2013, the founders launched a new business that had an app with such functionality. Six years later, it had over 12m daily active users and over 119,000 paying customers. It went public in that same year.
What’s the bottom line from all this?
That very few companies can remain what they are for all eternity. They can either disrupt themselves, or risk being disrupted by nimble competitors.
But, when it is big companies that can see these nimble competitors, they are often best poised to capitalise on the opportunity for change, and emerge stronger than ever. They just need to act rather than wait until it is too late.
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