FATANG Stocks
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Have you heard of FAANG or GAFAM but aren’t sure what FATANG means? In this article, we’ll examine why some investors prefer FATANG stocks and how investors use these stocks in their portfolios. Throughout their history, FATANG stocks have weathered varied market conditions, making them a potentially attractive addition to investment portfolios.
If you are interested in long-term or short-term investment strategies, you might consider investing in FATANG stocks. We’ll explain why these industry leaders are worthy of your consideration.
What Are FATANG Stocks?
FATANG is an acronym representing six of the largest and most popular US technology companies listed on the NASDAQ stock exchange. These stocks can all be found, with the exception of Netflix, in the top 10 holdings of the S&P 500 Index.
FATANG Stocks are:
- Facebook: FB
- Amazon: AMZN
- Tesla: TSLA
- Apple: AAPL
- Netflix: NFLX
- Google (Alphabet): GOOG
FATANG is very similar to another stock acronym, FAANG, which doesn’t include Tesla. The FAANG acronym was created several years before Tesla was admitted to the S&P500 index. These stocks are grouped together for their dominance in respective technology fields and phenomenal liquidity. FATANG stocks are some of the largest companies by market capitalization in the world. Accordingly, they have worldwide appeal helping to keep their trading volumes high.
FATANG is also very similar to another stock acronym, GAFAM. GAFAM includes the U.S. technology giant Microsoft and excludes Netflix.
Understanding FATANG Stocks
The FATANG stocks not only lead their respective sectors but because of their size, can have an outsized influence on the performance of the stock market overall. FATANG stocks have massive market capitalizations and represent approximately 25% of the value of the entire S&P500 Index. Consequently. when FATANG stocks fall, it will likely affect the entire stock market, not just the technology sector.
The social media corporation that defined social networking, Facebook, was created in 2004 by Mark Zuckerberg while attending Harvard University. Zuckerberg still leads the company as CEO. Facebook’s IPO was in 2012 and has a current market cap of just over $750 billion in March 2021.
Facebook has acquired several companies since then; the most notable acquisitions were Instagram and WhatsApp.\
In 2021, Facebook has about 2.8 billion users and a revenue growth of 20%. Facebook also has a strong balance sheet and impressive cash flow. However, Facebook isn’t without controversy. It is under scrutiny for content moderation, data privacy, and antitrust investigations.
Apple
Founded by the late Steve Jobs in 1976, Apple is the first company to reach a market cap of over $2 trillion in 2020. One of the world’s leading innovators, Apple is the largest consumer electronics provider, including mobile phones, computers, cloud computing, and computer software.
Apple consistently shows revenue growth and solid earnings. In their first-quarter earnings report of 2021, Apple announced record revenue of $100 billion. Apple was added to FANG in 2017, making it FAANG.
Tesla
Founded in 2003, Tesla is an electric vehicle and clean energy corporation. Tesla’s CEO, Elon Musk, owns 22% of the shares. Tesla is a leading innovator in electric transportation, solar energy, and renewable energy solutions.
Tesla’s market cap is 570 billion in March 2021, ranking it as one of the 10 largest companies in the S&P500. Tesla was the largest stock to be added to the S&P 500 Index and ranks in top 5 largest companies in the NASDAQ 100.
Amazon
A multinational tech corporation, Amazon’s predominant services include e-commerce, distribution, and digital streaming. Of all the companies on FATANG, Amazon is one of the few companies that leads in multiple industries. Created in 1996 by Jeff Bezos, Amazon is the world’s largest online retailer.
Amazon owns 47% of the US e-commerce market with over 100 million Amazon Prime members, where one in three Americans has a Prime membership. In 2020, Amazon reported $386 billion in net sales and a net income of $21.3 billion.
Netflix
Created in 1997, Netflix is a leading tech and media services provider and the world’s most popular streaming service. It has a market cap of about $228 billion as of March 2021 and is the 36th most valuable company globally.
While Netflix’s market cap is significantly smaller than other FATANG stocks, it’s popular among investors because of its dramatic growth in the last five years. Netflix is 21st on the S&P 500 and reported a record year in 2020 with annual revenue of $25 billion and over 200 million memberships. They also grew their operating profit by 76% to $4.6 billion.
Google (Alphabet)
Restructured in 2015 under the parent company Alphabet, Google is the largest internet search engine, claiming 92% of the internet’s search volume.
Alphabet is split into two share classes, GOOG and GOOGL, as a way to preserve the founders voting power.. Alphabet has a market cap of 1.4 trillion as of March 2021.
FATANG
GraniteShares FATANG ETPs provide exposure to the equal weight to following companies: Facebook, Amazon, Tesla, Apple, Netflix and Alphabet
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FATANG vs. FAANG
FATANG stocks primarily consist of four of the top tech corporations with the addition of Netflix and Tesla. These companies are some of the most valuable businesses in the US. They are seen as global leaders and influencers.
FATANG has a joint market cap of approximately $6.5 trillion as of March 2021.
Why FAANG Added Tesla
Tesla has been a popular stock with investors for many reasons, including its stock price performance and its huge army of loyal fans who support the company on online investing forums. Within the FATANG group, Tesla’s trading volume ranks second overall, behind Apple.
Tesla ranks second in options open interest behind Apple which can also be an indicator of a stocks popularity.
How to Invest in FATANG Stocks
Until very recently, investors were mostly limited to trading stocks or options on individual FATANG stocks. Investors looking for broader exposure were limited to strategies such as technology ETFs or index funds that included exposure to many more companies than just FATANG.
If you’re interested in FATANG exchange-traded products (ETPs), only one company offers a range of products on FAANG, GAFAM and FATANG stocks. Graniteshares ETPs are “pure play” investments, meaning that they are not diluted with unrelated stocks. Graniteshares ETPs follow equally weighted indexes that rebalance quarterly. Graniteshares family of ETPs allows investors to go long or short the FAANG indices or even 3x leveraged.
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DISCLAIMER
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