As most are aware, major indexes have notched big declines in 2022, tech companies address and react to poor public market performance, supply chain issues continue, and interest rates steadily increase in response to inflation spikes.
Fortunately, as many industries face difficult decisions ahead of an impending recession, two industries have proven to be recession-resistant: healthcare and sex. Amboy Street Ventures will continue to thrive as we invest in what many consider a “recession-proof” industry.
What we can learn from industries’ reaction to the 2008 recession and the pandemic
In 2008 during the great recession, sex-related sales skyrocketed throughout those tumultuous years. The public relations director at sex-toy company, Adam & Eve, in 2008 stated, “This industry is shielded in a way. It does seem people use us even more heavily in bad times.” As the country reached a peak unemployment rate of 10% during this time, society spent more time at home and narrowed spending to only necessities. Still, sex-related spending increased. In 2009, condom sales increased by 22%. During the pandemic, major sex-toy company Lelo reported an annual increase in sales of 185% in 2020. Sex-related sales exploded in a recession and a global pandemic; we expect nothing less as market uncertainty continues.
Similar to the sex industry, the healthcare industry consistently outpaces the broader stock market during recessionary periods and proves to be a way for investors to hedge against recession risks. During the 2008 financial crisis, Johnson and Johnson increased its adjusted earnings per share each year over the recession. Performance of top pharma players like AstraZeneca, GSK, Sanofi, and Novartis followed a similar trend, as there was no clear effect exhibited on quarterly sales or net income for most of these big pharma companies.
What might the future hold for sexual health and women’s health?
According to Andreesen Horowitz’s publication, Future, certain industries such as software and fintech are experiencing a decline in forward revenue of up to 80%. The sexual health and women’s health space will outpace other industries in a financial downturn.
Amboy Street will continue to responsibly invest in highly efficient and thoughtfully valued startups that are in the best position to prosper in these times.
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