The big technology stocks of Facebook, Amazon, Netflix and Google (FANG) have all rallied the past month. But not Apple which is seeing a near 7% decline over the period. It looks like FAANG (Facebook, Apple, Amazon, Netflix and Google) could be dead.
FANG Stocks Rally
Over the last month, Facebook shares are up 3%, Google nearly 5%, Amazon 9% and Netflix is surging with a 33%.
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Analysts are beginning to talk in terms of FANG again, rather than FAANG. Citigroup analysts, for the first time in six years, are bullish on all four of the stocks. Canaccord Genuity upgraded Google-parent Alphabet from a rating of hold to buy in January.
The popular acronym began FANG, first coined by CNBC Mad Money’s Jim Cramer. Apple was added later to make FAANG.
Why Could Apple be Dropped From FAANG?
Apple is certainly not having a good start to 2019. It first revised its sales forecasts, causing a major plunge for US stock markets and impacting global markets. Apple’s share price dropped 10%. It then announced production cuts of 10% for the next three months, further concerning Apple investors. The phone maker could be in for more bad news as Huawei mobiles look set to take iPhones second position in smartphone market share. According to a new report by TrendForce.
Economic slowdown in Apple’s biggest market, China, is causing iPhone sales to fall. High prices and better longevity of older iPhones make iPhone owners unwilling to upgrade their premium-priced mobiles as quickly. Apple is struggling. The recent Apple share sell-off could have been predicted.
Though Apple has other markets and is planning new releases in wearables and accessories, it needs to deliver good news to avoid an exit from FAANG’s recovery.
Netflix Stock Leading the Pack
Conversely, Netflix is on a winning streak with analysts being bullish on Netflix shares, even before its latest revelations. By January 7 Netflix stock had risen in every trading session giving it a 35% hike. Its share price rose further on news of subscription price increases. With a price hike topping 50% Netflix is expected to outperform Wall Street expectations.
Netflix will be the first FAANG stock of 2019 to deliver an earnings report, expected after the markets close today.
Goldman Sachs predicts:
“We expect Netflix to report 4Q results well above and provide initial guidance for 1Q in-line or modestly above consensus after the close on Thursday.”
The forecast is based on the streaming giants growing content library and distribution network. Goldman Sachs continues:
“combined to drive this outperformance, in our opinion, and should continue to do so in the year ahead as 2017/18’s significant increase in cash content investment pays off.”
The US markets have already seen a boost this week from Goldman Sachs and other bank earnings. With technology stocks back on the table after a terrible end to 2018, the markets are managing to ignore more political impacts. Though it looks like investors and analysts could be ignoring Apple in the short-term.
Last modified: September 23, 2020 12:21 PM