Some of the FAANGs Have Lost Their Bite

If 2020 was the year FAANG stocks shot straight up, 2021 is shaping up to be the year they went a bit crooked.

Silicon Valley’s world-leading tech giants—Facebook, Amazon, Apple, Netflix and Google-parent Alphabet— were unquestionable winners of last year’s pandemic market. A healthier economy has thrown this year’s returns into jeopardy, however, and some FAANG stocks have faltered as investors seek out better value.

F And G Stay Sharp

Money managers were left with few safe bets last year, as the global economy was rocked by waves of shutdowns. Many clung to big tech stocks like Apple, which grew 81% in 2020 and became the first public company to hit $2 trillion in market value. The other FAANGs also outperformed – Amazon grew 76%, Netflix 67%, Facebook 33%, and Alphabet 31%.

But as 2021 brought along vaccines and reopenings, only two have remained in the fast lane:

  • Alphabet and Facebook, with shares up 37% and 21% in 2021, have maintained last year’s mojo. That’s because they’re benefitting from an unprecedented surge in online advertising as the world roars back to life. Facebook’s latest quarterly profit doubled year-over-year, and Alphabet’s did even better.
  • But the rest of the FAANGs have dulled. Amazon is up just 7.1% in 2021, easily outpaced by the 11% growth of the S&P 500 benchmark. And Apple and Netflix are losers on the year, falling 1.7% and 7.4%, with the latter reporting particularly disappointing subscriber numbers.

Meanwhile, companies thrashed by last year’s shutdowns are now looking like better investments. Cruise line Carnival is up 30% this year, and American Airlines has soared 41%.

“A rising tide is lifting all boats right now,”Jim Golan, of the William Blair Large Cap Growth Fund, told The Wall Street Journal. “Just investing in the top four or five big-cap companies probably won’t do it this year.”

Good Question: Netflix is reportedly testing an “Are You Still Here?” feature for its customers. It might want to ask the same of investors.

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