As I’ve noted in the past, the best days are behind the FANG stocks. These headwinds have only intensified in recent weeks.
Just look at what’s happend to Facebook, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc (NASDAQ:NFLX) and Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL)! All have faced bad news of one type or another.
That’s not to say that they are inherently bad investments for the long term, but right now the risks are just too great to start a position. That’s especially true if you need your money to be liquid for better speculative investments, such as the “cloud kings.”
Cambridge Analytica has proven more than just a thorn in Facebook’s side, it’s a poison dagger spreading to the rest of the industry as politicians, journalists and citizens scrutinize our everyday interactions with technology companies.
That couples with broader headwinds blowing against the stock market as a whole, such as the threat of a full-blown trade war. That said, it’s definitely time to sell Facebook stock and the others before they take a bite out of your portfolio.
FANG Stocks to Sell: Facebook, Inc. (FB)
As I wrote recently, the revelation that Facebook may have inadvertently helped Donald Trump become president could hurt the company among those who despise the president.
Moreover, the company is now viewed as being haphazard (at best) when it comes to protecting users’ data. The story now appears set to stay in the news, as members of Congress and regulators around the world seem to be chomping at the bit to force Mark Zuckerberg to testify and/or take action against the company.
And as I’ve noted previously, all of this is coming as Snap Inc’s (NYSE:SNAP) appears to be making significant gains against Facebook. Highlighting this trend, research firm eMarketer recently estimated that the website’s share of U.S. digital advertising would drop slightly to 19.6% this year from 19.9% last year, while Snapchat’s share would increase to 1% this year from 0.6% in 2017.
And I’m not sure if eMarketer’s estimate is taking into account the total fallout from the 2016 campaign story.
FANG Stocks to Sell: Apple Inc. (AAPL)
The bad news seems to keep flowing for Apple and Apple stock. Barclays recently called smartphones a “trouble spot” for the company, according to The Fly. That’s a big problem for a company that has come to rely quite heavily on its smartphones, and it may reflect the fallout from Cupertino’s self-inflicted iPhone slowdown scandal.
Some analysts say that services will rescue the smartphone maker, but Macquarie recently cast doubt on that view, warning that a slowdown in Chinese gaming could significantly hurt Apple.
Coming to the company’s defense, Morgan Stanley says it remains optimistic about the outlook for Apple’s services, but it predicts that the company’s revenue will rise by “mid-single digits,” The Fly reported.
When a bullish analyst predicts that a large tech company’s revenue will rise by only about 5%, it’s a pretty good sign that the company’s better growth days are behind it.
FANG Stocks to Sell: Amazon.com, Inc. (AMZN)
Another FANG name, Google, seems to have Amazon in its crosshairs. According to Forbes, the search giant plans to “index product catalogs from retailers like Target, 1-800-Flowers, Home Depot, Costco and Ulta, creating a universal Google Express cart.”
Combining the advertising might of these retailers and Google, along with Google’s tech and search expertise, could create a major problem for Amazon.
Additionally, in January, President Trump renewed his call for an “internet tax” and blasted what he sees as Amazon’s exploitation of the U.S. Post Office.
The president and Google are two very powerful enemies. And the valuation of Amazon stock doesn’t leave much room for error. In other words, considering the high valuation of Amazon stock, any problems created by Google and/or Trump will hit Amazon stock hard.
FANG Stocks to Sell: Netflix, Inc. (NFLX)
Valuation is the main problem for Netflix stock currently.
A company that is providing guidance for negative free cash flow should probably not be trading at a trailing price to sales ratio of around 11.5.
Meanwhile, well-regarded research firm Citron said on March 12 that it was shorting Netflix stock over the longer-term as the specter of competition from Disney continues to hang over Netflix and Netflix stock.
FANG Stocks to Sell: Alphabet Inc. (GOOGL)
Just as Google appears to be looking to cause problems for Amazon, Jeff Bezos’ crew seems to be ready to become a thorn in Google’s side.
EMarketer predicted that Amazon’s share of U.S. digital ad dollars would jump to “nearly 3% this year, up from 2% last year,” and the firm estimated that Google’s share of the market would slump to 37.2% from 38.6% last year.
Nor can the ever-rising popularity of Amazon Echo be good news for Google, since many people will use Echo rather than Google to search for products and services going forward.
As of this writing, Larry Ramer did not own shares of any of the companies mentioned.
