Watch Video
What is FAANG Companies?
FAANG full form is Meta(Previously Facebook), Apple, Amazon, Netflix, and Alphabet (the “G” refers to Google). The FAANG companies are known as MAMAA, Big tech or the Big Five, originally started as stock market term to describe the newest and hottest hitters in the industry.
Thus the term FAANG Company refers to the five largest and best performing American Technology companies. The term was first coined by Bob Lang of the street. The FAANG is most often used in the finance world to describe the largest tech company stocks- “ FAANG Stocks”. The five FAANG tech companies all have reputations for providing staffers with high compensation packages but depending on the field and scope of employment there are certain FAANG Companies that outdo others when it comes to the best salaries. Each company has its own unique pay structure.
What is FAANG STOCKS?
FAANG companies are known for their high market capitalization, innovation and influence on the tech industry and global economy. FAANG Stocks have consistently outperformed the market in recent years and their success has led to increased scrutiny and concerns about the impact on competition, privacy and societal issues. Despite these challenges FAANG Companies remain some of the most highly valued and well known technology companies in the world with significant influence on the tech industry and global markets.
Understanding FAANG Stocks?
The five FAANG Stocks are among the largest companies in the world. Their growth has been buoyed recently by high profile purchases made by large and influential investors such as Bekshire Hathaway, Soros Fund Management, and Renaissance Technologies. There are just a few of the many large investors who have added FAANG Stocks to their portfolios because of their perceived growth or momentum.
FAANG Stocks are traded on NASDAQ exchange and is included in the S & P 500 index. Investing in FAANG stocks can be done through a brokerage account. Investors can purchase shares in individual companies or through a diversified fund such as an exchange traded fund or mutual fund that includes FAANG stocks. Its important to research the company’s financial health management, and competitive position before investing as well as stay up to date with market trends and news that can affect the company’s stock price. Diversification is also important as investing in a single stock can be risky. It is recommended to consult with a financial advisor to determine an appropriate investment strategy based on individual risk tolerance and investment goals.
Many may think-where did FAANG come from? In 2013, Jim Cramer coined the term FANG for these companies in his show Mad Money (CNBC) while praising these companies as being “totally dominant in the market.” Then, in the year 2017, Apple joined these companies to rename the term FANG as FAANG.
The S&P 500, which includes the 500 largest U.S. companies by market capitalization, features four of these firms—Apple, Amazon, Meta, and Google—in the top 10.
Example of FAANG Stocks & Companies
META (FB)
Facebook is an online social media and social networking service company founded in 2004. The company’s primary revenue stream comes from online advertisements. Facebook also owns several prominent subsidiaries, including Instagram, WhatsApp, and Oculus VR. The company went public in 2012, eight years after being founded, and has grown to be the world’s largest social media platform.
Facebook as of 2021, 2.5 billion active users, and it were the most downloaded mobile app in the world during the 2010s. It is available in 111 different languages to anyone who claims to be at least 13 years old. As of December 2020, the social media giant’s market capitalization is over $780.5 billion.
Amazon (AMZN)
Jeff Bezos established the company in 1994 as an online bookstore. AMZN is a diversified technology company operating in e-commerce, consumer electronics, and cloud computing industries. Amazon is a leader in cloud computing solutions through its Amazon Web Services (AWS) unit, online streaming of music and movies, and even consumer electronics with the creation of the Kindle, Kindle Fire, and Echo devices.
Amazon operates in countries around the world. By 2018, its two-day delivery system (Amazon Prime) listed over 100 million subscribers worldwide. As of December 2021, Amazon’s market capitalization is more than $1.82 trillion.
Apple (APPL)
This is the old veteran of the FAANG group, with a history that goes back to the emergence of the personal computer in the 1970s and 1980s. Now, the company still makes computers, but it also makes nearly half of its money from smartphone sales. It also generates revenue from apps, streaming music, cloud storage, smart watches, and a streaming television service released in 2019. Share prices of Apple have more than quadrupled since the start of 2016.
Nowadays, Apple is the largest IT Company in the world. In addition, on August 2, 2018, it became the first U.S. Company with a market capitalization of over $1 trillion. As of December 2020, its market capitalization is almost $2.2 trillion, with revenues of almost $275 billion.
Netflix (NFLX)
Netflix is a media provider that provides customers with subscription-based online streaming of films and TV shows. Recently, the company entered the content-production industry, producing its own movies and TV shows. In some ways, Netflix is the outlier of this group, as its market capitalization is smaller than the other FAANG firms. But its rapid growth in subscribers and its disruption of the video rental and television business have made it one of the most influential public companies.
Netflix counts almost 200 million paid subscriptions worldwide, making it a dominant player in the entertainment industry. It operates in over 190 countries and also produces a variety of Netflix Original content. As of December 202, its market capitalization is over $291 billion.
Google, Alphabet (GOOGL)
Alphabet is the parent company of Google, the world’s most popular search engine. It’s now also a maker of a smartphone, and has a wide range of investments in everything from self-driving car technology, to smart cities, to biotech through its venture capital arm, GV. It also owns YouTube, one of the largest social media platforms behind Meta. Investors who got in early with Google will have made out well, and even those who didn’t get in right away may still have profited handsomely.
Google’s market capitalization is $1.98 trillion, trading under its parent company, Alphabet.
Outlook
Investing in FAANG stocks is lucrative as the returns provided outperform both the average American Stock Market as well as the Indian Stock Market. Therefore, if an investor is looking to diversify their portfolio and considering investing in foreign securities, then FAANG stocks are the best to invest in. Not only are the companies well established and safe to invest in but also because these companies are represented by a few of the most versatile and dynamic leaders that started from scratch to build these empires.
What makes FAANG Stocks so Popular?
FAANG Stocks are known for its market performance, FAANG Stocks are the most valuable and dominant stocks in the US Market. They have performed consistently well and the market showing growth and momentum. The sheer size of the FAANG Stocks means that any movement in price can influence the overall market. With a combined market cap of trillions and a proven innovative history, FAANG Stocks make for promising investment options.
Are FAANG stocks overvalued?
Tech stocks are among the favorite ones for the investors due to its price increase. There are huge risk involved. The pandemic sent tech stocks soaring. Tech stocks are usually considered high risk investment. Central banks in the recent months have been withdrawing the cheap money, by the way of reducing quantitative easing or hiking interest rates. With inflation spiraling and larger hikes required, the market has been jittery and volatile . Investors disagree about the FAANG stocks being overvalued. Their proponents will argue that their valuations are justified based on their fundamental strength as businesses, But critics argue that even with the impressive business performance the FAANG Stock price have become more expensive that it may be difficult to realize attractive long-term profits from investing in them.
Are FAANG Stocks Hard to Acquire?
FAANG Stocks are all easy to acquire in the sense that they are publicly traded companies with substantial daily trading volumes. There are few Investors who believe that the FAANG Stocks may be overvalued would argue that they are difficult to acquire at an economical price. These investors may be tempted to delay purchasing FAANG Stocks, waiting for their valuations to decline. FAANG companies are always innovating, producing or deploying the latest technology to introduce new products or expand the market for old products. Also new technologies and products tend to make a lot of money for early investors when they are successful. This means the interest of these companies in new technologies and innovation can further improve global potential.
Conclusion
Thus FAANG Stocks are high growth tech stocks with large market cap. FAANG Stocks include Facebook, Amazon, Apple, Netflix and Google. Investors love FAANG stocks because of high returns, stability, market dominance , innovation and their ubiquitous use on the global scale.
