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BREAKING DOWN THE FAAMNG STOCKS

Being widely known among consumers, the five FAANG stocks are also amongst the largest companies in the world with a combined market cap of $5.56 Trillion as of August 2020.

 F – Facebook, A – Amazon, A – Apple, M – Microsoft, N – Netflix & G – Google (Alphabet)

The term ‘FANG’ was coined in 2013 in a show on CNBC for companies being “totally dominant in the markets”.

The FAANG stocks make up about 15% of the S&P 500 – a staggering figure considering the S&P 500 is generally viewed as a proxy for the US economy as a whole. This large influence means that volatility in these stocks can have a substantial effect on the performance of the general S&P 500.

Let's start by understanding the breakdown of FAANG stocks:-

Facebook is the largest social network in the world with approximately 2.7 Billion users. During the last reported quarter, Facebook stated that 3.14 Billion people are using at least one of the company’s core products. (Facebook, Instagram, WhatsApp)


Apple is the world's largest technology company by revenue and the world's most valuable company. It is larger than :-

Economies of entire countries – Only 7 companies have an annual GDP figure greater than Apple’s market cap. It is 2/3rd of India’s GDP.

The combined net worth of the world’s 18 richest people.

Indian stocks – The market cap of the top 5 Indian companies combined is just 1/4th of Apple. It is bigger than all stocks listed in India, with 4,722 listed companies. 


Amazon- The research firm, E-Marketer estimated that Amazon will be responsible for more than 40% of American’s e-commerce spending this year. According to its latest report Amazon, now has 288 million square feet of warehouses, offices, retail stores, and data centers.

Let us talk about Google now. Alphabet Inc is the parent company of this tech behemoth. Google has a large portfolio of over 160 subsidiary businesses. Google.com is the world’s most visited website, followed by YouTube.

Another variation is FAAMG, which includes Microsoft instead of Netflix because of its relatively small market cap compared to the other 5 companies in FAAMG. Each of the stocks in FAAMG is on top 10, by the market cap of the S&P 500 index.

 

Netflix was incorporating more technology than its competitors much earlier on. It is no

w officially the world’s most data-hungry application.

The big tech companies (FAAMNG) have become so big that even relatively modest percentage growth in any of their businesses would translate into enormous absolute changes in the world. Changing fast, eh?



By:

Aditya Tambi




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