The FANG stocks have been getting all of the attention for over a year now. At first, it was because they represented a new breed of tech stocks, and they were separating themselves from the field when it came to profits. Now, it’s because they are falling harder than others in light of the awful start for stocks in 2016. The question has gone from “are there any companies that can challenge these big four?”, to “can the big four ever recover?” It’s a legitimate question, and one that tech stock traders should be looking at in depth over the coming weeks.
Facebook, Amazon, Netflix, and Google (now called Alphabet) are a breed apart from other tech stocks. They offer unique services, and they lead their respective fields in those services. Last year, if you look at it as a whole, the major indices barely budged. Yet, these four companies combined made a profit total of 83 percent, effectively almost doubling in price. 2016 has not been kind to anyone, other than bears and short sellers, and these four have been hit hard.
Alphabet is by far the biggest player of these four. Their stock price has fallen from a year end price of $758.88 down to a current price of $693 and change. That’s a fall of more than 8 percent. Amazon, the second largest of the four, has fallen from $675 to $570, a fall of more than 15 percent.
The S&P 500 has fallen by about 8 percent, and collectively, these stocks are falling faster than that. It is giving them a lot of attention, but not for the reasons that they’d like to be getting it for. Value investors see this as a good thing because these are industry leaders and now their prices have been brought low. This is a great time to buy low, and then wait for the economy to fix itself so their prices will go back up. Even if prices drop more, it’s more than likely that these stocks will see their former glory by the end of 2017, if not more. Alphabet and Amazon are poised to see the biggest gains, but there’s potential for Netflix and even Facebook, too. But as Amazon is the biggest loser right now, they have the most to gain.
Short term traders should look to consumer sentiment before formulating trades, though. The best bet is to wait for earnings season, and make an educated guess on what will be announced. Amazon, for example, is expected to announce earnings after the close of market on January 28th. With a surge in Christmas sales, plus a growing Prime audience, Amazon is in a good position, barring anything unforeseen. Earnings per share are expected to be about $1.62 per share, which is huge compared to the same quarter last year, where earnings were actually $0.45 a share. If Amazon can beat that number, expect their stock to take off. It’s unlikely that they will hit their recent high of up over $675, but it could bring Amazon out of its funk and help them get back on the right path. They are by far the ones hit hardest of the FANG group, and a stellar earnings report could be just what they need to rebound. Binary options traders have a huge opportunity here as even if gains are tiny, they can string together a number of highly predictable, high return trades, all at a very low cost upfront. Putting in 20 60 second trades could have huge returns. Even if your success rate is 75 percent, at $100 per trade, and a 78 percent return, you will see a profit of $625. That’s not bad for only 20 minutes of market exposure on a stock that is a recent pariah.