Will FAANG Stocks Continue Falling in 2019?
As we quickly approach the end-of-year holiday season and the beginning of a new year, we thought it fitting to see how the FAANG stocks have been doing amid the market chaos of the past few months. Needless to say, it hasn’t been good.
We’ve had sharp drops in: the overall market, the tech sector, and all of the FAANGs. We’ve seen volatility remain at historically high levels for a prolonged period of time. We talked about FAANG stocks on several occasions, including here. Since that time (in late November), these stocks have done even worse. Only Netflix and Amazon are still positive for the year. But even these two former powerhouses seem to be holding on by a thread.
What are FAANG stocks?
First off, if you’re not familiar with the FAANG acronym, it’s a variation of Jim Cramer’s (of CNBC ‘Mad Money’ fame) term, FANG. FANG originally stood for a handful of the largest and most popular, top-performing tech stocks. They included: FB (Facebook), AMZN (Amazon), NFLX (Netflix), and GOOG (Alphabet). AAPL (Apple) was later added on (it’s unclear why it was excluded in the first place) to coin the new acronym, FAANG.
Are FAANGs Dead?
We obviously don’t have a crystal ball. But we can give an educated guess as to what the future likely holds for FAANG stocks as a group. There are good reasons these stocks have far outperformed in the past. They’re exceptionally innovative and strong tech companies with solid management teams and proven business models.
That being said, though, the era of ‘do-no-wrong’ FAANG stocks has pretty clearly come to an end. These companies can and will indeed stumble, and pretty badly at that. We’ve probably seen this to the severest extent in Facebook, as the scandals and business issues of the past year have weighed increasingly on the company’s stock. It’s the worst performer in the group, at -29% year-to-date as of Friday. This is pretty horrendous.
FAANG Stock Performance Breakdown
As it currentlly stands, FAANG stocks’ performance year-to-date is mixed:
- FB: -29%
- AMZN: +17%
- AAPL: -10%
- NFLX: +28%
- GOOG: -6%
Where are FAANG Stocks Headed in 2019?
Our guess is that 2019 and beyond will see the FAANG acronym gradually fade away. This particular grouping of stocks will likely fail to have any real significance going forward. Each individual stock will be judged by its own merits (or lack thereof). We currently see their performance for the year pretty mixed, with NFLX and AMZN still holding their heads above water; AAPL and GOOG succumbing to heavy bearish pressures; and FB having the hardest time of them all remaining relevant.
Will FAANG stocks survive in 2019? Most likely, yes, but very unlikely in their former glory.
From all of us at The Technicals, Happy Holidays and Happy New Year!
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IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Senior Market Analyst at The Technicals
A veteran global macro trader/analyst, Bart focuses on major market moves in currencies, commodities, fixed income, and global equity indexes. Bart stresses inter-market correlations and dynamics while keeping a close eye on risk. He has published countless market analysis pieces and has been a guest expert for a variety of major financial media. Contact Bart