You hear it all the time, especially if you’re watching financial shows on CNBC or the like: FAANG stocks. They throw the term around like it’s nothing, and expect everyone to know what it means. Sure, a quick Google search will tell you that it’s an acronym, and what that acronym stands for (Facebook, Amazon, Netflix, and Google – now known as Alphabet), but if you watch my stocks channel, and you’ve come here to my blog, you’re probably looking for a littler more info, so here you go:
The reason FAANG stocks are so talked about these last few years is because they’ve consistently performed well, especially during the pandemic. In recent times, at least, one thing’s for sure… FAANG stocks are a pretty safe bet. I mean, with only a few temporary dips, they’ve all been on the rise for the last five years, and from April 2020 until now, each one has increased in value by at least another 20% - that’s staggering. I probably don’t need to explain any of these to you, but just in case you’re curious, I will anyway.
Let’s start with Facebook. It wasn’t the first social media network, but it’s been the most successful one ever, by far. Ever since it unseated MySpace from its top spot years ago, the company has been on a tear. Sure, every few months, you’ll hear about a Facebook “boycott,” but I guess those have done absolutely nothing. For every quarter since at least 2008, the number of active monthly users worldwide has increased – every single time, without fail. And as they continue to acquire other tech giants like WhatsApp and Instagram, they’re not going anywhere anytime soon. Even my own Facebook page for Raja Makes Money continues to grow daily.
Next, the original “A” (in what used to just be “FANG,” discussed below) represented (and still represents) Amazon. Again, this company needs to introduction at all. I’d be surprised if every single person reading this did not receive an Amazon package delivered to their doorstep in the last 48 hours. Similar boycotts have been attempted. Even as recently as March 7, #BoycottAmazon was trending, and do you know what this did? That’s right; absolutely nothing at all. The sheer convenience of what they offer to consumers is indispensable, and most people don’t even know that AWS (Amazon Web Services) powers a plethora of cloud-based resources for thousands of companies, at a premium. There’s a reason why Jeff Bezos has the second highest net worth in the world, and you can bet that his wealth, and his company’s, will continue to grow.
Also continuing to grow: Apple. They’ve done so well that, in 2017, the financial community had to add an extra “A” to what’s now “FAANG,” because of their undeniable and continuing success. And why are they so successful? Well, think of five people you know… Does at least one of them own an Apple product? A computer? An iPad? An iPhone? An Apple Watch? There’s your answer. Apple has really always had a cult-like following, and when Steve Jobs passed years ago, analysts worried that the cult following might die with him. They were wrong. Apple fanboys are more prevalent now than they’ve ever been, and as such, their stock continues to increase in value.
And so does the Netflix stock. What started as a great idea back in 1997 (a monthly DVD mail-in membership service) has today morphed into the undeniable leader in video streaming entertainment. And the pandemic has only helped them grow. Recently, there has been some reasonable concern about their future, since every media company and their grandmother (Disney, HBO, NBC, etc.) has been establishing their own competing streaming service (and pulling their content from Netflix), and the average person can’t afford to pay for them all. But Netflix has had a big head start here, and, so long as they keep bankrolling their own popular content – as they’ve been doing for the last several years – it’s hard to imagine them going away.
The last letter in the FAANG acronym is “G,” for Google (which is now the Alphabet company). I’m not going to spend much time explaining the value of this organization, but I will say this: When your company name has become a verb that everyone uses in their daily lives, you’re doing something right. I mean, let’s not forget: These guys own YouTube, as well.
So, there you have it folks. FAANG stocks. They’ve almost always been strong, and – although it’s possible I might be wrong – I don’t see anything tremendously negative happening to them anytime soon. That’s one of the reasons you see me trading Apple stock so often. All of these companies have truly become indispensable to the global economy, so take that for what it’s worth, come to your own conclusions, and invest accordingly.