American Big Tech shares took one of their biggest hits of the year this week, as crises on multiple fronts threaten to topple the dominance of the sector’s big leaders. It leaves shares in the so-called ‘FANG’ companies – Facebook, Apple, Amazon, Netflix and Google – in a precarious financial position. Some experts are predicting catastrophe.
Shares in each of the FANG companies are bloated in price, yet they’re underperforming the NASDAQ: is the market, as the Financial Times surmises, about to be de-FANGed? And, if the big five do topple, where does that leave the rest of Silicon Valley’s movers and shakers – many of whose fortunes rest on the piledriver success of market leaders?
It is natural that FANG stocks should wobble, at a time when outside influences look set to infringe on their omnipotent rise to power. Facebook faces congressional hearings and mass-user depletion, following privacy scandals and the weak response of CEO Mark Zuckerberg.
Apple could face a supply chain problem following Donald Trump’s declaration of trade war with China. The US President has also allegedly vowed to “go after” Amazon, which might mean tax hikes or antitrust legislation. Google is fighting a wave of antitrust suits – especially in Europe, where EU lawmakers have hit it with successive blows, and look set to continue doing so.
That leaves Netflix. And while shares in the Los Gatos-based media firm have skyrocketed – they are now worth almost 1,200% what they were five years ago – its growth looks decidedly bubble-shaped of late, and could very soon burst. It is already selling off shares, and was down around 4% as of morning trading yesterday.
Tech investors must also look to a growing clamor to regulate the tech industry more comprehensively amid fears over labor, privacy and monopolies akin to those of the industrial revolution. And while it is true that Apple, Google and Facebook sit on cash stockpiles that would easily absorb even the most rapacious of public sector fines, what such moves would mean for future profits is up in the air.
Moreover, the mere fact that tech’s key players are looking weak for the first time in years, should see to a decrease in their collective value over the next few months at least. Markets do not enjoy even the whiff of instability or weakness. The last few weeks, Big Tech has reeked of both. Expect FANG’s financial value to take increased hits in the coming months.