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Can FAANG Stocks Bounce Back Amid Market Turmoil?

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Tech stocks have been beaten down, with FAANG stocks at the helm of the carnage. Per a Wall Street Journal report, FAANG stocks have collectively lost around $575 billion in market cap since the beginning of October. It goes without saying that FAANG stocks have had a rough ride this year. Understandably, there have been multiple reasons behind this decline.

Facebook, Apple, Amazon Bleed

Per a Wall Street Journal report, the FAANG family, comprising Facebook Inc. (FB - Free Report) , Apple Inc. (AAPL - Free Report) , Inc. (AMZN - Free Report) , Netflix, Inc. (NFLX - Free Report) and Alphabet, Inc.’s (GOOGL - Free Report) Google, has collectively lost $575 billion in market value since the beginning of October. Both Apple and Amazon were robbed of their $1 trillion market cap crowns.

Meanwhile, Facebook got embroiled in a data misuse scandal involving Cambridge Analytica that resulted in the company’s shares taking a hit. Following this, Facebook posted disappointing second-quarter results, wherein it missed earnings expectations for the first time in 11 quarters. So much so that Facebook lost almost $150 billion in two hours after missing expectations on both earnings and revenues.

Apple’s shares have been suffering on concerns of slowing demand for iPhones. Moreover, the iPhone maker recently announced that it won’t be reporting sales numbers for iPhone in its quarterly reports. Things worsened after the company gave a weak guidance for the current quarter.

Although Amazon posted the second straight quarter of record profitability, its shares have taken a hit time and again in 2018. Despite impressive results, the e-commerce giant gave a tepid outlook for the holiday season.

Netflix, Google Feel the Heat

Netflix by far has been the best performer in the FAANG group. However, Netflix’s shares tumbled 13% in after-hours trading after the company said that it added a meager 5.2 million new subscribers in the second quarter, falling shy of its forecast of 6.2 million.

Alphabet too has been one of the major sufferers, with the company’s shares taking a beating on slowing growth in sales. October traditionally hasn’t been a good month for stocks. Shares of Facebook, Amazon, Apple, Netflix, Google and Apple declined 4.8%, 19%, 20%, 4.6% and 9.7%, respectively, in October alone.

Price Performance of FAANG Stocks in the Last 3-Month Period

Challenges Galore for FAANG Stocks

Understandably, the FAANG family has a spate of challenges waiting ahead. Facebook is facing threats of further regulatory scrutiny. Facebook’s shares took a hit once again on Friday on concerns that it could face regulatory scrutiny following a New York Times report on Wednesday about the company’s efforts to avert criticism of its handling of Russian propaganda.  

Netflix, despite being way ahead in the streaming war, is likely to face challenges with more players like The Walt Disney Company (DIS - Free Report) AT&T Inc. (T - Free Report) and Apple jumping the bandwagon. Apple’s slowing iPhone demand has been a growing concern for quite some time now. In fact, many analysts believe that by no longer reporting iPhone sales figures, it wants to hide the pain of slowing demand for iPhone. 

Google, despite reporting profits in the third quarter fuelled by gains in digital advertising and smartphones, missed the revenue estimate.  Taking all these factors into account, FAANG stocks may be on a rocky road ahead.

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