As far as acronyms go, FAANG is a pretty cool one; it represents the most influential tech stocks of the last decade, but are FAANG stock a good investment?
Originally coined in 2013 by CNBC’s Jim Cramer as FANG, this investment acronym has evolved into FAANG, or FANG+ and represents some of the biggest tech companies on the stock market over the last decade.
It stands for:
Facebook (NASDAQ: FB)
Amazon (NASDAQ: AMZN)
Apple (NASDAQ: AAPL)
Netflix (NASDAQ: NFLX)
Google (NASDAQ: GOOG)
As of April 8, 2020, all 5 combine for a total worth of just under $3.5 trillion. Wow!
Each one was chosen for a very specific reason, as leaders of their respective fields: Facebook as the top social media site; Amazon as the dominant e-commerce platform; Apple as the biggest brand in America; Netflix as the king of streaming; and Google as the world’s data leader.
Since then other stocks have been itching to get in on this exclusive club, with the likes of Microsoft (NASDAQ: MSFT), Walmart (NYSE: WMT), Uber (NYSE: UBER), and more having their names tossed in the pile. Several analysts believe that Netflix should be replaced with Microsoft, with President Trump even trying to change the group to ‘MAGA’ (Microsoft, Apple, Google, Amazon), as a reflection of his ‘Make America Great Again’ campaign.
However, these 5 stocks were picked for a reason, and could represent a solid base investment.
FAANG stock growth
Even with the world reeling from the coronavirus pandemic, FAANG stocks are still the top dogs and are likely to come out the other end of this crisis with little issue. This is because they have experienced a decade of growth, with the tech sector booming since the Great Recession of 2008-09.
To give an idea of FAANG’s growth, here is how each member has performed over the past five years:
- Facebook: up 87%.
- Amazon: up 409%.
- Apple: up 91%.
- Netflix: up 498%.
- Google: up 105%.
Why are FAANG stocks so important?
While there is a wide margin between many of these stocks, do not let that deter you from their growth potential. All of these companies are a part of daily modern life. Just look at these stats:
- Facebook has more than 2.3 billion users globally.
- More than 100 million Amazon prime members in the U.S.
- There are an estimated 100 million iPhone users in the U.S. alone.
- There are 60 million Netflix subscribers in the U.S. and more than 160 million worldwide.
- Google has more than 90% search engine market share worldwide.
They are outliers and their importance to us all, whether wanted or not, is undeniable. This is reflected in their growth, which will be hard to stop now that they are so ingrained in our lives. With so many sectors emerging and being disrupted, these companies are still venturing into the likes of healthcare, autonomous driving, AI, cloud networks, and more.
The core products for which we know these companies are known are no longer their most important offerings. Just look at the iPhone; it no longer represents half of all Apple revenue, with its wearables and services on the rise. It has adapted, just like its fellow FAANG members.
Even Netflix is continuing to stave off competition from the likes of Disney (NYSE: DIS), having established itself over the past decade as the number one streaming platform with massive investment in original content and an unbeatable user experience.
Should I invest in FAANG stocks?
When it comes to long-term investment then these FAANG stocks are a great place to start. It depends on the individual investor which one they prefer, or perhaps you’d like to invest in all of them.
However, here at MyWallSt, we have 6 Golden Rules for investing, and that includes investing with a long-term strategy and investing in what you believe in. Ask yourself if any of these companies are for you. Perhaps, like me, you’re an Apple-fanatic, or you use Amazon every day, or have watched everything Netflix has to offer.
If you are also looking for a diversified portfolio, which is key to surviving economic downturns, then you can consider beefing up your portfolio with a few FAANG stocks. If you’re unsure where to get started investing, then FAANG may be a good platform to jump off of.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.