The FAANG companies are considered major players that significantly influence stock market performance. Some of these companies play a large role in broader market returns due to their size and impact. In particular, Meta (formerly known as Facebook), Amazon, Apple, Netflix, and Google (listed under Alphabet, the parent company) are companies with significant influence and are widely referred to as FAANG companies (not to be confused with FAAMG).
Why FAANG Stocks Matter
FAANG stocks deserve significant attention, even if you do not invest in them directly. This is because they constitute a large part of the total market capitalization of the stock market, and their price movements can affect the market as a whole.
Meta (FB)
The company was founded in 2012 and went public eight years after its establishment. The company’s main social media platform, Facebook, is the largest in the world, with over 2.7 billion active users. The company has expanded its products through acquisitions of Instagram, Oculus VR, WhatsApp, and others.
Amazon (AMZN)
The company started selling books online in 1995, and it is now the largest online retailer in the world. Besides being a massive force in the retail sector, Amazon is a leader in cloud computing solutions through its Amazon Web Services (AWS) division, music and movie streaming services, and even consumer electronics by creating devices like the Kindle, Kindle Fire, and Echo.
Apple (AAPL)
Apple is the long-standing member of the FAANG group, with roots tracing back to the personal computer’s emergence in the 1970s and 1980s. Today, the company still manufactures computers, but nearly half of its revenue comes from smartphone sales. It also generates income from apps, music streaming, cloud storage, smartwatches, and its streaming television service launched in 2019. Apple’s stock price has increased more than fourfold since the beginning of 2016.
Netflix (NFLX)
In some ways, Netflix stands out as the exceptional company in this group, as its market value is smaller than that of other FAANG companies. However, its rapid growth in subscriber numbers and its disruption of movie rental and television businesses have made it one of the largest publicly traded companies with significant influence. Netflix went public in 2002 as a very different company, offering a subscription service to rent DVDs by mail. It gradually shifted to streaming films and then began producing original content. It now has over 222 million subscribers willing to pay between $9.99 and $19.99 per month for its streaming service. Netflix spends heavily on programming, so massive profitability may still be a ways off. While the company has seen rapid growth in subscriber numbers, new member growth slowed somewhat in 2022. Nevertheless, investors have been rewarded, as the stock has nearly tripled since the beginning of 2017. Volatility may be a concern; for instance, shares surged to around $690 during the second half of 2021 before falling to about $380 by March 2022.
Google, Alphabet (GOOGL)
Alphabet is the parent company of Google, the world’s most famous search engine. It is now also a maker of smartphones and has a wide range of investments in everything from self-driving car technology to smart cities to biotechnology through its venture capital arm, GV. It also owns YouTube, one of the largest social media platforms behind Meta.
How to Invest in FAANG Stocks
Each FAANG company is listed on the New York Stock Exchange (NYSE) or NASDAQ, so buying shares of each company is a straightforward process for most investors. The easiest way is through an online brokerage account with firms like E-Trade, Fidelity, TD Ameritrade, and Robinhood.
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It is worth mentioning that FAANG stocks are not cheap. For example, one share of Google sells for about $2500, and Amazon is trading close to $3000 as of March 2022.
If you find yourself unable to purchase FAANG stocks or prefer not to own individual stocks in companies, you can gain exposure to them through several mutual fund exchange-traded funds. Any index fund that tracks the S&P 500 or the broader stock market will include FAANG stocks. Large funds focused on technology companies and the telecommunications industry will provide similar exposure.
Source: https://www.thebalancemoney.com/investing-in-fang-stocks-4147534
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