Visualizing The Bear Market In FAANG Stocks

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posted on 18 December 2018

Over recent years, there hasn’t been a safer bet than big tech – specifically the FAANG stocks, which include Facebook, Apple, Amazon, Netflix, and Google’s parent company Alphabet.

But in the financial world, this feeling of euphoria can be turned upside-down very quickly.


Since the summer, the five tech giants combined have lost close to $1 trillion in market capitalization from their peaks. Now the FAANG stocks have officially slipped into a bear market, with investors blaming rising interest rates, slumping sales forecasts, possible government intervention, and bubble-like valuations as reasons for the reversal in fortune.

The Damage Done


The generally accepted definition of a bear market is a 20% or greater decline from recent market highs.


Facebook and Netflix have been in bear territory for months, but the remaining members of FAANG only just recently capitulated. Apple was the last to go – but with -24% in lost value since its peak on October 3, it is now in trouble as well.


Tell Me Why


Why have investors soured, at least temporarily, on the tech stock universe?


There are multiple narratives floating around, but the general gist is something like this: the current bull market in stocks is nine years long, and at some point the party will come to an end. Because the FAANG stocks traditionally trade at very generous valuations, they are likely to come back down to earth as economic conditions deteriorate.


Further, the fears around FAANG stocks are seemingly being confirmed by recent news. For example, there are reports of Apple slicing orders for iPhones, a stagnant Facebook userbase, and other growth hurdles being experienced by these companies – and these reports are helping to fan the flames.


Some experts see the slump as an opportunity to load up on discounted tech heavyweights – while others, such as early Facebook investor Jason Calacanis, say it is possible that the social network has already experienced its “Yahoo peak” in terms of relevance and valuation.

[click here to enlarge infographic]

Source:
https://www.visualcapitalist.com/visualizing-bear-market-faang-stocks/

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2018-12-18 03:53:00

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