FAANG is used to define the stocks of the five most important and leading technology companies, namely - Facebook, Alphabet (also known as Google), Netflix, Amazon, and Apple. As you must have assumed from the names, all these companies happen to be the dominating names in their respective industries. For example, Amazon is one of the leading and most popular marketplaces on the internet. Likewise, Facebook is the most dominating social networking platform.
The term “FAANG” was introduced by the host of Mad Money “Jim Cramer” in the year 2013. He believed that these companies are dominating their markets. Initially, Cramer coined the term “FANG”. As Apple’s popularity kept growing, another ‘a’ was added to the term, making it “FAANG”.
Not only is FAANG popular for being widely recognized in the consumers’ Market or being the first choice of customers, but these companies had a total market share of approx $4.1 trillion at the beginning of 2020. While some argue that FAANG does not deserve the success and popularity it has been gaining over the past few years, others believe that the financial performances of these companies definitely make them the dominant names.
Their sudden growth has been the result of some high-profile purchases lately. Popular investors in the Industry, including Berkshire Hathaway, Renaissance Technology, and Soros Fund Management have invested in the FAANG Stocks. They have added these stocks to their investment portfolios, making FAANG even more popular.
Considering its strength, momentum, and popularity, people have been constantly Investing in FAANG stocks. The popularity and extraordinary support these companies are receiving have led to several concerns.
Due to the growing concerns and controversies in this industry, the FAANG stocks lost their worth by as much as 20 percent in 2018. The decline of the stocks of these prominent companies resulted in the loss of up to a trillion dollars.
Despite having recovered from that state, the fluctuations in the FAANG stocks and the high Volatility rates are still raising many concerns. Some investors are still not certain about investing in these stocks. However, some believers have strong evidence stating the growing value of the FAANG stocks. For instance, Facebook happens to be the most prominent social media website with 2.5 billion active accounts in 2020. It has reported a net Income of $18 billion.
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Likewise, Amazon is dominating the B2C marketplace. Half of the population using Amazon has subscribed to its prime membership. It has more than 120 million products for sale and 150 million accounts. These stats clearly suggest the growth of the FAANG stocks in the market.
Both Amazon and Facebook have witnessed a growth in the stock price up to 500% and 185%. In the past five years, Apple and Alphabet also reported a growth in their stock price up to 175%. The number of people subscribing to Netflix membership has increased by 450%. The growth in the FAANG stocks has made it easier for the five companies to prosper.