FANG Stocks: The Titans of Technology Investment
In finance, ‘FANG’ refers to four of the most influential American technology companies: Meta (formerly Facebook), Amazon, Netflix, and Alphabet (Google). These corporations are known for their notable growth, with each seeing its stock prices more than double since 2018.
In 2017, Apple was often included by analysts, expanding the acronym to ‘FAANG’. From August 2018 to August 2023, Apple’s stock price surged over 113%.
Key Takeaways
- FANG stands for Facebook (Meta), Amazon, Netflix, and Google (Alphabet).
- Since 2017, Apple has been included, forming the acronym FAANG.
- FANG members have achieved remarkable growth in both revenues and net profits.
- These stocks can be highly volatile, especially during downturns in technology markets.
- Despite varying business models, these companies all leverage advanced technology to gain and retain users.
Understanding FANG Stocks
The term ‘FANG stocks’ was coined by The Street’s Bob Lang and became widely known through Jim Cramer on CNBC’s Mad Money. These stocks trade on the Nasdaq exchange and are often seen as benchmarks for growth investments. Despite sharing a reputation for success, their business models differ significantly.
Meta
Meta is the leader in social networking with over 3.88 billion monthly active users by mid-2023. It monetizes this vast user base by selling targeted ads based on users’ preferences and activities.
Amazon
Amazon is a powerhouse in B2C e-commerce, utilizing state-of-the-art cloud computing and data analytics technologies. Originally known for selling books online, today Amazon’s product variety is nearly limitless.
Netflix
Netflix has seen significant customer growth, now boasting over 238 million subscribers. It competes by producing exclusive content in addition to aggregating existing media.
Alphabet (Google)
Alphabet leads global search engine technology, running a highly lucrative online advertising business and supporting user engagement through myriad applications like YouTube, Google Docs, and Google Maps.
FANG Stock Performance
Investors gravitate towards FANG stocks due to their exceptional financial performances. For instance, as of August 2023, Meta reported revenues over $116.6 billion and a net income exceeding $23 billion. Despite experiencing a net income loss of -$2.7 billion, Amazon’s revenue was an impressive $544 billion.
Netflix and Google have also thrived, with Netflix generating over $31.6 billion in revenues and a net income of $4.5 billion, and Google pulling in $280 billion with nearly $60 billion in net income. Consequently, Netflix’s stock rose by 26.8% and Google’s by about 113.2% over the last five years.
How to Invest in FANG Stocks
Investors can directly trade FANG stocks through zero-commission brokers. Although no funds contain only FANG stocks, tech-heavy ETFs, such as those tracking the Nasdaq 100, offer substantial exposure.
Why Are FANG Stocks Popular?
FANG stocks are known for their significant growth and relative stability. Even as “growth stocks,” they remain less volatile than many other tech investments, consistently delivering superior returns.
Business Models of the FANGs
While united by advanced technology, FANG companies each have distinct business models:
- Facebook (Meta): Leading social networking platform, primary income from targeted advertising.
- Amazon: Major B2C e-commerce entity, diversified product offerings, strong cloud computing services.
- Netflix: Online entertainment streaming service, significant production of exclusive content.
- Google (Alphabet): Pioneering search engine, dominant in online advertising.
The Bottom Line
Meta, Amazon, Netflix, and Alphabet make up FANG— a collection of companies celebrated for their incredible growth and sparking immense investor interest in the tech sector.
Related Terms: FAANG, technology sector, stock market, Nasdaq, growth stocks, investment strategies.
References
- Trading View. “Apple Inc”.
- CNBC. “Cramer: Does Your Portfolio Have FANGs?”
- Nasdaq. “Nasdaq Stock Market”.
- Facebook. “Meta Reports Second Quarter 2023 Results”.
- Amazon. “Amazon Stats: Growth, Sales, and More”.
- Netflix. “Company Profile”.
- Trading View. “Meta Platforms, Inc”.
- Trading View. “Amazon.com, Inc”.
- Trading View. “Netflix, Inc”.
- Tradin View. “Alphabet Inc (Google) Class C”.
