DEFINITION of 'Story Stock'

A story stock is a stock whose value reflects expected outperformance (or favorable press coverage) rather than its assets and income. A story stock's share price is often bid up on overly optimistic expectations about its potential profits. Its valuations are generally out of line with its fundamentals, since investors will pay a premium for the shares to participate in its growth prospects. Many story stocks are in the dynamic technology or biotechnology sectors due to the lure of purchasing shares of an innovative company that may discover the cure for cancer or invent a new fuel source.


Story stocks often garner substantial media coverage. Because of the abundant attention, a story stock may attract heavy trading volume for many months, until a new contender displaces it. A few story stocks may achieve great success, but most fail to achieve their promise.

The abundance of story stocks depends on market conditions. Story stocks are commonplace and flourish during bull markets, but are relatively rare in bear markets. The industry sector that generates the most story stocks at a particular time depends on the dominant investment theme such as tech or energy. While a typical story stock has numerous supporters, its rapid rise and rich valuations also tend to attract short-sellers, who are skeptical about the company’s long-term prospects. Therefore, a story stock will typically attract above-average short interest, which can lead to significant price volatility.

The FAANG Story

In 2013, CNBC's Jim Cramer coined the term FANG to refer to four dominant technology stocks as measured by market performance and capitalization: Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google's parent company Alphabet Inc. (GOOG). Apple (AAPL) was added later on in the year to make it FAANG. These story stocks were strong performers from 2013 on, and in 2017, the five stocks' average performance was about 50%, compared with a 19% gain for the S&P 500 Index (SPX). The valuation and spectacular performance of the FAANGs have been likened to that of the tech stocks before the 2000 dot com burst, which led many overvalued tech companies to crash and roiled global markets. However, some analysts have noted that there is a difference between both tech classes, stating that there is plenty room for the current tech class to grow as areas of cloud computing, social media, e-commerce, artificial intelligence (AI), machine learning and big data are still being explored and developed.

  1. FAANG Stocks

    FAANG is an acronym for the five most popular and best-performing ...
  2. Media Effect

    The media effect describes how certain stories that the media ...
  3. FANG Stocks

    FANG is the acronym for four high-performing technology stocks: ...
  4. Growth Stock

    A growth stock is a publicly traded share in a company expected ...
  5. Speculative Stock

    A speculative stock is a stock with a high degree of risk, such ...
  6. Technology Sector

    The technology sector is a category of stocks relating to the ...
Related Articles
  1. Personal Finance

    5 Things You Should Know About Job Hunting After 50

    This infographic disproves 5 common myths regarding starting a second career later in life.
  2. Tech

    Google Introduces Its Own Version of 'Stories'

    AMP stories is still in the early stages and is yet to support advertising, which could put off publishers.
  3. Investing

    Why The FAANGs' Hot Streak May End Soon

    The best days for these mega cap tech stocks may be behind them.
  4. Small Business

    9 Tips For Getting Free Publicity For Your Business

    Branding and publicity are extremely important for small businesses. We look at some helpful hints and tricks for entrepreneurs.
  5. Investing

    The Tech Bubble Will Burst: The Question Is When

    The five FAANG stocks - Facebook, Apple, Amazon, Netflix, Google - may be creating a $2.4 trillion tech bubble
  6. Financial Advisor

    Advisors: When Should You Issue a Press Release?

    Before issuing a press release ask these four questions to make sure it's worthwhile.
  7. Investing

    What Is A Dividend?

    Income investors love them and growth investors rarely expect them, but just what are dividends? Learn the story behind these payouts and why they are (or aren't) offered to investors.
  8. Investing

    Facebook Aims to Tackle Fake News in Germany

    A new filtering tool will let users flag news stories as fake, which will allow Facebook to label the stories as "disputed."
  9. Investing

    FAANG Short Interest Up 7.6% Since Mid-August

    FAANG stocks surged all year, but now the bears are coming out, says S3 Analytics.
  10. Investing

    Why Wall Street's Analysts Won't Give Up on Tech

    Despite concerns, analysts are unwilling to give up on firms that have raked in massive returns.
  1. What's the difference between Alphabet's GOOG and GOOGL?

    Learn the difference between the GOOG and GOOGL stock ticker symbols for Alphabet (the company formerly known as Google). Read Answer >>
Trading Center