CAN INVESTORS TRUST FAANG AGAIN?
Market eyes first quarter earnings stabiliser after recent sell-off in the high-flying group of stocks
WALL Street is hoping that first-quarter earnings growth and corporate forecasts are strong enough to bring the FAANG group of stocks back into favour and take the spotlight off worries that caused the recent sell-off in the high-flying group.
With valuations below recent peaks, the group — comprised of Facebook, Amazon.com, Apple Inc, Netflix and Google parent Alphabet Inc — could get some relief if the companies beat, or meet, Wall Street estimates.
Shares in the group, which led the S&P 500 to record highs in January, often trade together. They were pummelled late in the quarter on worries about a data privacy scandal at Facebook and United States President Donald Trump’s public criticism of Amazon. On top of this, fears of a trade war with China escalated during the quarter.
For the group, analysts expect average first-quarter year-overyear earnings growth of 25.8 per cent, up from 12.4 per cent growth in the fourth quarter and a 12.8 per cent increase a year ago.
“All we’re getting now is negative news... once we start to see the numbers, you’re going to see a bigger spotlight on the success these companies are having,” said Daniel Morgan, portfolio Internet firms, including Google, would face onerous regulations or slowing advertising revenue growth after Facebook said nearly 87 million of its members’ personal data was leaked.
Facebook fell almost 24 per cent below its early February record to hit US$149.02 (RM578.34) on March 26, its lowest point since July last year, due to the scandal. Google had fallen almost 18 per cent below its January record by March 28.
Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia said the US$76-million Chase Growth fund cut its Facebook investments to 1.8 per cent from 3.1 per cent of its portfolio due to the scandal.
Amazon stock was hurt by criticism from Trump, who said he would take a serious look at what he claimed were the online retailer ’s unfair advantages with taxes and shipping rates. It fell 16.3 per cent between March 13 and April 4.