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AlphaSense’s top 9 trends of 2018
August 15, 2018
5 min read
What were the most significant trends of 2018?
A lot has happened this year. Tensions mounted as a trade war heated up between the United States and China. The rollout of GDPR in the European Union challenged companies to rethink how they process personal information. Cannabis grew as an emerging market, and new tech gadgets developed the Internet of Things.
When we look at these trends from a corporate perspective, we find that the issues highlighted in traditional media are also reflected in company documents like filings, presentations, earnings calls, and press releases issued by large and small companies.
AlphaSense’s smart search engine uses Machine Learning and Natural Language Processing to search across content, discern search intent, and distinguish significant trends. As we wind down 2018, we decided to take a closer look at some of the year’s hottest topics, based on the number of times a word or phrase was found among thousands of company earnings transcripts.
Here’s what we found:
AlphaSense’s top trends of 2018
This year, the theU.S-China trade war was a front-and-center topic, with mentions picking up in March 2018, shortly after President Donald Trump announced tariffs on solar panels, washing machines, steel, and aluminum on China. Escalating tariff proposals followed from both sides, prompting conversations across industries on the future of international trade and the potential impact it could have on earnings. Finally, at the G20 Summit in late November, China and the U.S. agreed on a 90-day truce, halting Trump’s proposal to hike tariff rates from 10 percent to 25 percent on around $200 billion in goods. China also agreed to buy agricultural products from the United States as part of the deal.
This year, the term “trade” seemed to go hand-in-hand with “tariffs” due to the swirl of headlines and international politics surrounding the issue. Though the outcome is uncertain, conversations surrounding trade will continue into 2019, as long-term effects from 2018 continue to impact industries and potential new regulations are introduced.
As trade and tariff talks loomed, so did freight mentions and the potential impact on cost. In addition, concerns over adequate staffing, labor, and fleet size were also frequently mentioned during freight discussions.
The General Data Protection Regulation, or GDPR, took effect in the European Union on May 25, 2018. The regulation awards specific data protection and privacy rights to citizens of the EU and restricts the way companies and organizations handle personal data. Regardless of where they’re located, any company that deals with the personal data of EU citizens must be GDPR compliant. The fine for negligence could be up to 20 million euros or 4 percent of global annual revenue. The law was initially adopted in 2016, giving companies two years to get up to speed before it was fully enforced.
When we say 606, we’re referring to ASC 606 — short for Revenue from Contracts with Customers (Topic 606). The Financial Accounting Standards Board rule, initially introduced in 2014, changes the way companies report revenue from contracts with customers. As a result, all companies that report financial statements under the U.S. GAAP (the U.S. Generally Accepted Accounting Principles) must now be compliant.
When you take a closer look at earnings call mentions of “Turkey” this 2018, much of the conversation focuses on the health of the lira. The lira’s value to the U.S. dollar experienced a significant drop throughout 2018, causing concerns over a potential economic crisis. According to the Financial Times, the lira was still down overall in December 2018.
It was a big year for the emerging cannabis industry. In October 2018, Canada became the second country globally (Uruguay was first) to legalize recreational marijuana (you can see the spike). In the U.S., Michigan, Oklahoma, Vermont, Utah, and Missouri voted to further legalization initiatives, joining a handful of states that have already implemented medical or recreational cannabis regulations. New regulations mean new opportunities for new business, with some speculation of potential IPOs in 2019.
The 2017-2018 flu season was nothing to sneeze at. The CDC dubbed it a “high severity season,” with new highs for influenza-related hospitalizations. Many conversations reflected the impact of a severe season (peaking in May) when it comes to earnings season chatter. Speculation on this year’s flu season, which typically lasts from December through February, was also top-of-mind.
Internet of Things (IoT)
This year, the continued growth in popularity of connected devices, like wearables, voice assistants, and “smart” tech fueled the IoT trend. According to Motley Fool, 1.9 billion connected devices will be shipped by companies by 2019, leading to around $490 million in revenue. Consumer adoption is also expected to grow as “smart” devices become more mainstream. Amazon AWS, IBM, Oracle, Salesforce, and Microsoft are among some major players leading the transformation.
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