The big technology stocks known as the FAANG group posted stellar gains in 2017, leading many investors to wonder if their upward momentum will extend into 2018. If recent historical trading patterns hold, shares of Facebook Inc. (FB) and Netflix Inc. (NFLX) may continue to be market leaders in the month of January, CNBC reports.
Using analytic tools developed by Kensho Technologies Inc., CNBC studied the price performance of the FAANG stocks in the month of January, during the five years from 2013 through 2017. They assumed that these shares were bought on the last trading day of December and sold on the last trading day of January. The average price moves for these stocks during January in the last five years, along with their actual full year 2017 gains, were:
Alphabet is the parent of Google. The S&P 500 Index (SPX) advanced by 19.42% in 2017. The FAANG stocks accounted for about 10.9% of the capitalization-weighted S&P 500 as of December 28, per SlickCharts.com.
Netflix has beaten analysts' earnings estimates in the fourth quarter of each year from 2012 through 2016, which may account for much of its subsequent gains in January, CNBC speculates. Right now, Netflix is expanding internationally and spending heavily on producing original content in order to maintain a competitive advantage, CNBC says. However, they are up against deep-pocketed current or potential rivals that include fellow FAANG members Amazon, Facebook and Apple, among others, CNBC adds.
Facebook has surpassed 2 billion users, and is using video and its Instagram subsidiary to engage and monetize these users. However, costs may grow by as much as 60% in 2018, CNBC notes, driven by the production of original content as well as aggressive hiring to increase security and combat the posting of "fake news."
Alphabet is enjoying rapidly growing ad revenue, with mobile search and its YouTube video service being key drivers, CNBC says. However, regulators in the European Union (EU) have hit Google with a $2.7 billion fine for anti-competitive practices, and more investigations are underway, they add.
Amazon may have captured as much as 50% of holiday season online sales in 2017, up from 38% in 2016, according to research by Daniel Ives, head of technology research at GBH Insights, per CNBC, while its cloud computing business continues to grow rapidly. Amazon also is making a big push to win advertising revenue from Facebook and Google, per another CNBC report.
Analysts bullish on Apple see a "supercycle" being driven by the new iPhone X, CNBC indicates. Follow-on sales of apps and music should increase the revenue impact, which may be enhanced further if Apple moves into video streaming, possibly including original content, CNBC adds. However, a December 26 report in Taiwan's Economic Daily claims that weak demand will prompt Apple to cut its projection of iPhone X unit sales in the first quarter of 2018 by 40%, CNBC warns. (See also: 10 Stocks With 'Significant Upside' in an Overpriced Market.)