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FANG Stocks to Get Pummeled by Escalating DOJ Antitrust Probes

Last Updated September 23, 2020 12:46 PM
Lawrence Meyers
Last Updated September 23, 2020 12:46 PM

By CCN.com: How bad will things get for the FANG stocks amidst the DOJ antitrust probe?

Bad. Worse than it already has been.

I expect 30% downside for Facebook, Amazon, and Google stocks, and they will bring down Netflix and Apple.

Donald Trump Goes Full Pitbull

The DOJ probe is entirely political. Google, Facebook, and Twitter have been censoring conservatives.

The instances of blocks, bans, shadow bans, and internal memo leaks take this well beyond coincidence.

Donald Trump knows the influence that big tech – aka the Masters of the Universe – have over public opinion, particularly during elections.

He wants to put the kibosh on this before the election cycle kicks in.

Once is a Coincidence, Twice Is a Pattern

We’ve already seen this from Donald Trump, so it actually comes as no surprise.

Donald Trump sent the DOJ antitrust division to block the AT&T-Time Warner merger. He did this for one reason: to punish CNN. The nearly-irrelevant “fake news” network has long been the primary target of Donald Trump’s scorn.

There was no reason for the DOJ to try and block the AT&T merger. The DOJ had no case, became increasingly thin as the case went on, and got destroyed  in court.

Yet that did not dissuade Donald Trump. He had the DOJ press on anyway. If for no other reason, he wanted to send a message to the media.

The media didn’t get it. In fact, investors in Google, Facebook, and Twitter stocks doubled down. Now they’ll pay.

Donald Trump Will Strangle the FANG Stocks

There’s a critical difference between the AT&T situation and FANG stocks. Donald Trump had to know the DOJ had no case in the AT&T matter.

The situation is very different with FANG stocks, particularly Google and Facebook stocks. There is ample evidence of bias and censorship, which is only a problem for the very reason that Google and Facebook control so much of their respective markets.

Even then, however, it doesn’t really matter. Donald Trump is after one thing: stop the censorship.

That’s why the likely end to these probes will be a settlement with the government which includes that mandate.

Apple, Google, & Amazon Stocks Will Crater

Because this matter will take a year or longer to resolve, FANG stocks will be under pressure for quite some time. Just look at what happened to Time Warner’s chart during the antitrust case. Time Warner soared to $107 on the deal announcement and then fell 20% to $86 before going out at about $95.

Donald Trump can move the market with a single tweet. Look at what’s happened when he tweets about the trade war.

Expect the same thing. FANG stocks will pick up in volatility and just when things look fine – tweet tweet – they’ll dump.

There is some good news. Picking up FANG stocks at a 30% discount to today’s price will be a bargain. We’re just not there yet.