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Is the FAANG era over?

Facebook, Apple, Amazon, Netflix, and Google have seen better days

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Per Bloomberg, recent earnings show that the FAANG stocks — Facebook, Apple, Amazon, Netflix, and Google — are more vulnerable than previously expected.

FAANG stocks…

… have dominated their markets over the last decade, making them popular picks for growth investors seeking lofty returns. But all 5 tech giants have been plagued by recent challenges:

  • Facebook lost ~500k daily users in Q4 2021, and suggested it could have its 1st YoY revenue drop next quarter
  • Apple recently warned it could lose $8B due to supply chain constraints this quarter
  • Amazon reported its 1st quarterly loss in 7 years Friday, resulting in the stock tumbling ~14%
  • Netflix announced it lost subscribers for the 1st time in over a decade, leading its stock to drop 35% the next day, and wiping $50B from its valuation
  • Google showed slower growth than last year and missed revenue projections for Q1, thanks in part to a weak quarter for YouTube

In 2022, all five stocks are down, with Apple being the only one outperforming the S&P 500 index.

So how bad is it?

It could be worse. Last August, FAANG stocks made up ~19% of the S&P 500 index’s market cap. Today, that number is just below ~15% — a meaningful drop, but still a massive percentage for 5 out of 500 companies.

So while the quintet has seen better days, it would be unwise to count them out for good.

One investor believes the biggest change facing FAANG is perception: Once considered some of the market’s hottest growth stocks, FAANG may be viewed as more of a value play going forward.

GLOSSARY

  • Growth stocks are expected to beat the market over time due to their future potential
  • Value stocks are established businesses that analysts believe to be undervalued

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