Origin of FAANG
Many may think-where did FAANG come from? In 2013, Jim Cramer coined the term FANG for these companies in his show Mad Money (CNBC) while praising these companies as being “totally dominant in the market.” Then, in the year 2017, Apple joined these companies to rename the term FANG as FAANG.
The S&P 500, which includes the 500 largest U.S. companies by market capitalization, features four of these firms—Apple, Amazon, Meta, and Google—in the top 10.
The total market capitalization of FAANG companies runs into trillions of dollars, and they alone are capable of influencing the whole stock market. Some of the most dynamic changes in the world and technological revolution was brought by these companies making them the most dominant, as Jim Cramer said. Whether you talk about electronic devices, data, shopping, entertainment, or socializing, FAANG companies are the ones that have laid the foundation of this technology-driven world.
The five mega giants and the most successful companies in the American stock market i.e. the FAANG companies comprise of Facebook Inc. (FB), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Netflix Inc. (NFLX), Google LLC (GOOGL; now Alphabet Inc. These are the companies that have changed the definition of interacting, socializing, shopping and entertainment and are some of the best performing companies not only in the US but across the globe. FAANG stocks are very popular, and find a place in portfolios of many investors owing to their size, dynamism, growth prospects, and most importantly, the leaders that represent these companies.
Facebook is an online social media and social networking service company founded in 2004. The company’s primary revenue stream comes from online advertisements. Facebook also owns several prominent subsidiaries, including Instagram, WhatsApp, and Oculus VR. The company went public in 2012, eight years after being founded, and has grown to be the world’s largest social media platform.
Facebook as of 2021, 2.5 billion active users, and it were the most downloaded mobile app in the world during the 2010s. It is available in 111 different languages to anyone who claims to be at least 13 years old. As of December 2020, the social media giant’s market capitalization is over $780.5 billion.
Jeff Bezos established the company in 1994 as an online bookstore. AMZN is a diversified technology company operating in e-commerce, consumer electronics, and cloud computing industries. Amazon is a leader in cloud computing solutions through its Amazon Web Services (AWS) unit, online streaming of music and movies, and even consumer electronics with the creation of the Kindle, Kindle Fire, and Echo devices.
Amazon operates in countries around the world. By 2018, its two-day delivery system (Amazon Prime) listed over 100 million subscribers worldwide. As of December 2021, Amazon’s market capitalization is more than $1.82 trillion.
This is the old veteran of the FAANG group, with a history that goes back to the emergence of the personal computer in the 1970s and 1980s. Now, the company still makes computers, but it also makes nearly half of its money from smartphone sales. It also generates revenue from apps, streaming music, cloud storage, smart watches, and a streaming television service released in 2019. Share prices of Apple have more than quadrupled since the start of 2016.
Nowadays, Apple is the largest IT Company in the world. In addition, on August 2, 2018, it became the first U.S. Company with a market capitalization of over $1 trillion. As of December 2020, its market capitalization is almost $2.2 trillion, with revenues of almost $275 billion.
Netflix is a media provider that provides customers with subscription-based online streaming of films and TV shows. Recently, the company entered the content-production industry, producing its own movies and TV shows. In some ways, Netflix is the outlier of this group, as its market capitalization is smaller than the other FAANG firms. But its rapid growth in subscribers and its disruption of the video rental and television business have made it one of the most influential public companies.
Netflix counts almost 200 million paid subscriptions worldwide, making it a dominant player in the entertainment industry. It operates in over 190 countries and also produces a variety of Netflix Original content. As of December 202, its market capitalization is over $291 billion.
Google, Alphabet (GOOGL)
Alphabet is the parent company of Google, the world’s most popular search engine. It’s now also a maker of a smartphone, and has a wide range of investments in everything from self-driving car technology, to smart cities, to biotech through its venture capital arm, GV. It also owns YouTube, one of the largest social media platforms behind Meta. Investors who got in early with Google will have made out well, and even those who didn’t get in right away may still have profited handsomely.
Google’s market capitalization is $1.98 trillion, trading under its parent company, Alphabet.
Investing in FAANG stocks is lucrative as the returns provided outperform both the average American Stock Market as well as the Indian Stock Market. Therefore, if an investor is looking to diversify their portfolio and considering investing in foreign securities, then FAANG stocks are the best to invest in. Not only are the companies well established and safe to invest in but also because these companies are represented by a few of the most versatile and dynamic leaders that started from scratch to build these empires.