Best performing FAANG stock and the biggest loser
Best performing FAANG stock and the biggest loser among the pack in 2022 so far
The performance of FAANG stocks has been as per the expectations after the Fed started hiking interest rates.
Is the story over for the hugely popular FAANG stocks? The big run-up in the share price of these five stocks – Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google ($Alphabet(GOOG)$) – commonly referred to as the FAANG group happened during the 2020-2021. Since January 2022, the story is different and the share prices of FAANG stocks have fallen.
“Just as tech stocks led the way higher throughout the good times, the prospect of higher interest rates and a withdrawal from risk assets does put the Nasdaq in the firing line,” says Joshua, Mahony Senior Market Analyst, IG.
All the FAANG stocks are a part of the Nasdaq 100, a tech-heavy index that is down by 24.80% in 2022 so far and is lower by 21.39% over the last 1-year. The difference between the best ($Apple(AAPL)$) and the worst ($Netflix(NFLX)$) performing FAANG stock in 2022 so far is nearly 51%. Apple ($Apple(AAPL)$), Amazon ($Amazon.com(AMZN)$), and Google ($Alphabet(GOOG)$) have fallen almost as that of the Nasdaq 100 index while Facebook (FB) and Netflix ($Netflix(NFLX)$) have been the underperformers so far.
The big downfall for the tech leaders began once it was clear that the US Fed will start raising interest rates so as to control the raging inflation. Higher interest rates are especially dangerous for growth stocks. The majority of the cash flow generated by growth corporations, like the U.S. IT behemoths, is in the future. Future cash is less valuable than it was when interest rates were lower because of higher interest rates.
With the recently declared results, the guidance put forth by these tech companies becomes important. “The FAANG and other top stocks, barring a handful, have largely had robust earnings. While valuations continue to remain elevated, businesses with stabler cash flows and less volatile earrings continue to remain attractive. Waiting for valuations can lead to opportunity costs, as timing these events is extremely difficult,” says Ramkumar Venkatramani, Lead – Investment Advisory, Kristal.AI.
Meta Platforms ($Meta Platforms, Inc.(META)$), the parent company of Facebook has seen its share price slide by over 51% since January 2022. Incidentally, Facebook has been renamed Meta and the company now trades under the new stock ticker – META. Over the last 3 months and 1-year, the META stock price is lower by 13% and 57% respectively. The 52-week range of META, a 422.39 billion dollar company, is $154.25 – $384.33 and the stock is currently trading at around $162.
The question on every investor’s mind is why are the Facebook stock price falling and the answer to it lies in the results declared by the company recently. The company’s weak revenue forecast and struggling online advertising business could be the possible reasons for the META share price to fall.
Apple ($Apple(AAPL)$), a 2.55 Trillion-dollar company, has seen its share price slide by over 11% since January 2022. Over the last 3 months, the AAPL stock price is lower by 3% but is still up by 3% over the last 12-months period. The 52-week range of AAPL is $129.04 – 182.94 and the stock is currently trading at around $156.
Amazon ($Amazon.com(AMZN)$) has seen its share price slide almost 24% since January 2022. Over the last 3 months, the stock is up by about 4% but is still down by nearly 27% in the last 1-year period. The 52-week range of AMZN, a 1.31 Trillion-dollar company, is $101.26 – 188.11 and the stock is currently trading at around $125.38. AMZN stock has been under pressure ever since the end of July 2022, when many research firms started to report poor Q2 smartphone shipping numbers as a result of a slowdown in consumer electronics devices like smartphones and PCs.
Netflix ($Netflix(NFLX)$) has seen its share price slide over 62% since January 2022. But, over the last 3 months, the stock is up by almost 15%, while NFLX stock price over the 1-year period is still lower by 61%. The 52-week range of NFLX, a 98.12 billion-dollar company, is $162.71 – 700.99 and the stock is currently trading at around $222.
Google ($Alphabet(GOOG)$) has seen its share price slide over 24% since January 2022. Over the last 3 months and 1-year, the GOOG stock price is lower by 4% and 25% respectively. The 52-week range of GOOG, a 143 Trillion-dollar company, is $102.21 – 152.10 and the stock is currently trading at around $108.
The stock market has reacted differently to EPS surprises reported by S&P 500 companies during the Q2 earnings season. To know how the stock market reacted to positive and negative EPS surprises with Amazon and Netflix stocks, click here.
“US corporate earnings have broadly fared better than expected. While Meta’s earnings were disappointing, earnings of other tech biggies like Apple, Amazon, Alphabet, and Microsoft, though not outstanding, were strong enough to make investors feel that their businesses were still going strong. Investors should not try and time the markets. We recommend that they invest regularly and stay invested for the long- term,” says Viram Shah – Co founder and CEO, Vested Finance.
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