FANG is an acronym that represents several key technology stocks trading on a stock exchange. The list of companies considered to be a FANG stock has changed over the years. Check out these original FANG stocks as well as the new additions below.
What Are FANG Stocks?
"FANG stocks" is a term coined by Jim Cramer in 2013. It originally stood for the major technology stocks offered by Facebook, Amazon, Netflix, and Google. These stocks are traded on the NASDAQ stock exchange and are often the biggest stock gainers. Another popular stock exchange in the United States is the New York Stock Exchange (NYSE). While the NYSE acts as an auction market, the NASDAQ allows for computerized electronic trading through dealers. There are many stock markets across the world where securities can be traded.
Investors and financial organizations track many different stocks to represent portions of the market or the entire market. These are indexes, such as the Dow Jones Industrial Average (DJIA) and the Standard & Poor’s 500 index (S&P 500), which is an index of the top 500 largest U.S. publicly traded companies by market capitalization. Market capitalization is a company’s value achieved by multiplying the price per share by the number of outstanding shares at any given time. As share prices fluctuate, the market cap will also fluctuate for any given company.
All of the original FANG stocks—plus new additions, such as Apple and Microsoft—are large enough to be tracked on the S&P 500. As a point of reference, the S&P 500 had a combined market cap of $25.6 trillion in June 2019.
The social media tech giant Facebook is the first of the FANG stocks by order of acronym only. Currently, Amazon sits higher than Facebook on the S&P 500, with over $330 billion difference in market capitalization. Facebook stock trades on the NASDAQ exchange under the ticker symbol: FB. This technology giant exists in the computers and technology sector like most FANG stocks. Annual sales produce $55.84 billion per year from 35,587 employees. Facebook also owns popular social media platform Instagram and the messaging app WhatsApp. There are 2,852,950,000 outstanding shares, with a total market cap in October 2019 of $522.89 billion.
Recent concerns with privacy and user data security have rocked the company with fines and increased oversight, which has dampened some outlooks on future growth. However, don’t let some volatility sway you from investing in a potentially great company. Active stocks can produce great returns. You can find more information about the most active stocks here.
This online retail catalog and mail-order business is doing exceedingly well. Trading on the NASDAQ, this company employs 647,500 people to produce annual sales of $232.89 billion. The stock symbol for Amazon is AMZN. There are 494,656,000 outstanding shares, which is a lot less than the nearly 3 billion outstanding shares that belong to Facebook. In addition to being the most successful worldwide online retailer, Amazon also provides lucrative web services, such as cloud computing on cloud servers and investing in future projects.
Despite the far fewer shares, Amazon has a market cap of $858.94 billion (Oct. 2019). Amazon sits just below Apple and Microsoft on the S&P 500. Since Apple and Microsoft are in the same technology sector as other FANG stocks, many investors also include them when discussing FANG.
Netflix was one of the first and the most successful of the online media streaming businesses. Starting out as an online DVD rental and retail business, Netflix took advantage of emerging technology and mail order delivery to knock Blockbuster off the map before transitioning to online streaming. Netflix is trading on NASDAQ under the symbol NFLX. With annual sales of $15.79 billion and 7,300 employees, Netflix has over 437,835,000 shares outstanding. This comes to a total market capitalization of $125.02 billion (Oct. 2019). Over the past few years, Netflix has become a worldwide powerhouse of media generation and distribution. This company is now creating Netflix Original series through studios around the world.
This technology giant works in the computer and technology sector including search advertising, software development, data processing, and other computer-related services and hardware, such as Chromebooks, Pixel smartphones, and Nest smart home products. Google provides an interesting end to the original FANG stocks. This is in part due to the fact that Google has restructured under the parent company Alphabet Inc. However, this ruins the acronym FANG by turning the G into an A making it FANA.
Most investors still refer to this stock as Google and the ticker symbol on NASDAQ is GOOGL. Many users around the world turn to Google services, which include the most used search engine in the world, Google Maps, Google Drive, Google Photos, Docs, Sheets, and more. Google also plans for many future projects such as virtual reality, Google Glass, and driverless cars. Google has annual sales of $136.82 billion and employs 98,771 workers. The number of shares outstanding is 693,400,000, which comes to a market cap of $844.40 billion (Oct. 2019).
FAANG Stocks and Other Variations
Some stock market analysts like to include technology companies that outperform the traditional FANG stocks, such as Apple and Microsoft. These can create variations of the acronym FANG to be FAANG or FAANGM, and so on. Some also like to include the technology company NVIDIA or online retailer Alibaba operating across Asia.
FAANG stands for Facebook, Amazon, Apple, Netflix, Google, while the acronym FAANGM also includes Microsoft. Here is some important information about each of these companies.
Investors tend to include Apple in the discussion of FANG stocks for many reasons. This company also operates in the computer and technology sector. The company famously started with personal computers and Macintosh followed by the macOS operating system and the world-changing iPhone. Apple trades on the NASDAQ under ticker symbol AAPL.
Apple operates with 132,000 employees and annual revenue exceeding $265 billion. Currently, the number of shares is 4,519,180,000 with a market capitalization of $1,070.44 billion, almost twice the market cap of Facebook. The higher market cap also places this stock higher in the S&P 500. Apple has heavily invested in handheld computers as well as music streaming and customer segregation. By utilizing a different operating system for all Apple products, customers tend to exclusively purchase Apple or iPhone products instead of using Android for smartphones and other computer operating systems, such as Microsoft Windows.
The best performing stock on the S&P 500 index is Microsoft. This technology giant started with personal computer development and prepackaged software creation in the computer and technology sector. Competing with Macintosh and other Apple products, Microsoft quickly became a worldwide name in computing. Trading on the NASDAQ with symbol: MSFT, there is no surprise that Microsoft is lumped in with FANG technology stocks. This company produces annual sales of $125.84 billion and employs 144,000 workers.
There are currently 7,635,410,000 shares outstanding for a market cap of $1,076.44 billion. Microsoft also plans to stay relevant in the future by investing in new technologies. For a time, Microsoft also produced smartphones. CNBC noted that Microsoft and the other four FANG stocks account for almost 12.6 percent of total market value. Consider that the S&P 500, which tracks 500 different companies, has a total market capitalization over $25.6 trillion (Oct. 2019). The combined market cap of the FANG stocks, plus Apple and Microsoft, are almost over $4.5 trillion—which equates to 17.57% of the total.
NVIDIA is another major technology company that hovers near the 49th spot on the S&P 500. This company operates in the computer and technology sector producing video drivers, graphic cards, semiconductors, video game streaming services, and related devices, such as the Nvidia Shield TV. With a ticker symbol on the NASDAQ exchange of NVDA, this company reaches annual sales of $11.72 billion and employs 13,277 workers. NVIDIA had 609,000,000 shares outstanding for a total market cap of $117.69 billion. Although not as high performing as other FANG stocks, this company approaches Netflix in scale. Some may choose to add this and other technology stocks to the traditional FANG stocks.
There is no Exchange-Traded Fund (ETF) specifically just for FANG stocks. Many ETFs may include all or some of these FANG stocks, however, these ETFs are also invested in many other companies as well. Some of these ETFs, such as the New Tech and Media ETF offered by Advisor Shares, get attention by focusing on the FANG stocks. This ETF even uses the ticker symbol FNG but includes many more companies than just the FANG stocks (plus Microsoft and Apple). There are approximately 25 tech companies included in this exchange-traded fund.
You can find many ETFs with some or all of the FANG companies included. Most FANG stocks also do not offer dividends. Instead, many tech companies will reinvest the profit instead of distributing it to investors. This can help fund growth and thus potentially improve the stock price per share. Investors must choose which strategy or strategies to pursue when investing, such as a dividend investing strategy.
Should You Invest in FANG Stocks?
There are many different ways to make a profit when you buy or sell high-performing stocks. Some traders prefer to add the best growth stocks to their portfolio instead of focusing on dividend earnings. The volatility of technology stocks is offset by the higher earnings per share, but focusing on investing only in FANG stocks can leave an investor without growth potential if the technology sector takes a hit during a bear market.
Protect the money in your portfolio by diversifying. You can choose from many different types of securities to lower the overall risk of your investment. Generally, these stocks seem to perform very well or at least maintain a higher market cap and subsequent value. Focusing on earnings growth or dividends can still result in losses. It is important to note that some losses can actually offset gains in other areas.
Investors who trade these tech giants on a stock exchange aim to take advantage of the growth potential and momentum. Wall Street analysts have noted these technology stocks as stocks to buy. Tech stocks like those offered by FANG companies have outperformed in the tech sector over the past years. Investors can take advantage of this trend by investing in FANG stocks or another FANG acronym with similar performance.
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