FANG stock prices (Facebook, Amazon, Netflix and Google) have dominated portfolios across the globe, and growth has been spectacular. But is this particular tech bubble about to be burst?
The winners and losers are becoming clear in the wake of Donald Trump’s shock election victory. With markets anticipating deregulation, massive tax cuts and huge infrastructure spends, industrials and financials have been the clear winners as inflation looms.
It’s a very different story for the fabled FANG stocks – Facebook, Amazon, Netflix and Google (now Alphabet) – with Trump levelling his most stinging pre-election criticism at the Clinton supporters of Silicon Valley.
The FANG CEOs all hit back, and were openly critical of the man who will now be their President. These usually bomb-proof stocks have all lost value since November 7th, amid speculation that Trump will actively seek to implement retaliatory policy aimed at hurting the big 4.
FANG Stock Definition
FANG Stocks To Lose Bite?
DoubleLine CEO Jeffrey Gundlach predicts a bear market in FANG stocks, claiming that their basic underpinning ‘disappeared‘ with Trump’s election. He is also convinced the big crash will come on January 20th when Trump will be inaugurated as President. Gundlach says the market is now caught up in a ‘bizarre’ turnaround from early fears of a stock market crash to the idea that a Trump presidency is the best thing ever to hit the markets. But FANG will be the most accurate bellwether of financial pain yet to come.
Though bonds are currently being sold off at a dizzying rate, a bond rebound could send stocks tumbling. And that could be lose-lose for high risk FANG stocks that trade on some challenging multiples. Recent rapid rotation in FANG also reflects the market’s belief that they expect overseas profits to not be repatriated tax free, a move that Bernstein analyst Toni Sacconaghi believes will only benefit Amazon – and tech rival Apple.
If Trump’s positions on net neutrality and protectionism spell trouble ahead for FANG, Apple may find themselves in a win-win situation. The tech behemoth would see huge benefit from Trump’s expected corporate tax reforms and a tax holiday as it has a high tax rate of 26% and $216 billion in cash stockpiled overseas. Only Cisco Systems could repatriate a greater percentage of its market cap. The future looks bright for Apple, but FANG stocks look set to get de-fanged.
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