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No Teeth Left for the FAANG Stocks & Microsoft?

| May 09, 2022
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So far in 2022, these 6 stocks have lost 50% more than Russia’s GDP

Since the COVID-bear retreated in March 2020 through the end of 2021, all we heard was how stock market gains were driven by just a handful of stocks – the FAANG stocks (and Microsoft). But since the beginning of 2022, investors are now wondering whether the FAANG stocks and Microsoft have lost their teeth.

If you don’t know, the term FAANG is an acronym for five technology names – Facebook (Meta), Apple, Amazon, Netflix and Google (Alphabet). Let’s examine the performance and the change in market cap for each of the FAANG stocks and Microsoft so far in 2022. Let’s call this new group the MAANAM stocks (nowhere near as cool-sounding as FAANG).

The Performance of the MAANAM Stocks

In terms of performance, so far this year through the end of April:

  • Facebook is down over 35%;
  • Amazon is down over 25%;
  • Apple is down over 10%;
  • Netflix is down over 68%;
  • Google is down over 18%; and
  • Microsoft is down over 15%.

Many of those returns are worse than NASDAQ’s almost 20% decline so far this year through the end of April. But all of them are worse than the mega-cap, blue-chip DJIA’s loss of less than 10%.

Lost Market Cap in Billions

In terms of market caps, the FAANG + Microsoft stocks have lost a staggering $2.2 trillion so far in 2022. And that includes a whopping $1.4 trillion loss in the month of April alone.

Company

Market

Cap – 12/31/2021

Market Cap – 4/29/2022

Market

Cap

Loss

Facebook (Meta)

$922

$543

$379

Amazon

$1,691

$1,264

$427

Apple

$2,913

$2,552

$361

Netflix

$267

$85

$182

Google (Alphabet)

$1,922

$1,508

$414

Microsoft

$2,525

$2,076

$449

Total

$10,241

$8,027

$2,214

Source: FactSet

For perspective, that $2.2 trillion loss is bigger than the entire economy of Mexico, bigger than the economy of Italy, bigger than Spain’s, bigger than Canada’s, bigger than Australia’s – and 50% bigger than Russia’s annual GDP.

Sizes Within the Overall Market

Here are a few other things to note:

The technology sector makes up about 23% of the market weight of the S&P 500 (by way of comparison, technology comprised about 34% of the S&P 500 during the tech bubble in March 2000).

The FAANG names make up over 21% of the S&P 500. But when you add Microsoft to that group, it jumps to over 27%.

  • Facebook is 1.3% of the market;
  • Amazon is 3.7% of the market;
  • Apple is 7.1% of the market;
  • Netflix is 0.25% of the market;
  • Google is 4.2% of the market; and
  • Microsoft is 6.0.% of the market.

So while some might be worried that losses (and gains) are driven by so few names, there is something investors need to remember: that’s usually how it works with market-cap weighted indices – very few names usually account for the majority of the gains.

A Perspective to Consider

From the viewpoint of a seasoned financial advisor, my perspective is actually pretty straightforward: if you only own the just the FAANG or MAANAM stocks – or even a few stocks – you are simply not diversified. Period.

Call to discuss your options.

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