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FAANG Stocks Have a November to Dismember

By Rick Munarriz – Dec 1, 2018 at 8:15AM

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Facebook, Amazon, Apple, Netflix, and Alphabet didn't all head lower last month, but those that stumbled carried the iconic fivesome down by 4.7%, on average, in November.

November is now officially over, but tech investors probably are still licking their wounds. It was a rough month for growth stocks, particularly the five bellwethers that make up the FAANG family. Facebook (META 1.97%), (AMZN 1.26%), Apple (AAPL 1.56%)Netflix (NFLX 2.08%), and Google parent Alphabet (GOOG 2.65%) (GOOGL 2.81%) turned in a collective clunker of a month. 

Apple took the biggest hit, and at one point earlier this week, temporarily lost its crown as the country's most valuable company by market cap. It wrestled it back by the end of the trading week, but after a brutal November, it's not as if there will be a lot of high-fives landing in Cupertino. Amazon and Alphabet bucked the trend by inching higher, but it wasn't enough to spare the five tech giants from a sharp decline for the month. 

The cast of Netflix's Spain-based show "Elite."

Image source: Netflix.

Wrecking ball

Stock 10/31/18 11/30/18 Gain/(Decline)
Facebook $151.79 $140.61 (7.4%)
Amazon $1,598.01 $1,690.17 5.8%
Apple $218.86 $178.58 (18.4%)
Netflix $301.78 $286.13 (5.2%)
Alphabet $1,090.58 $1,109.65 1.7%

Data source: Yahoo! Finance.

A portfolio equally weighted in the five FAANG components would've taken a 4.7% hit in November. It's a rough contrast to the S&P 500, which closed out the month with a 1.9% gain. The five stocks had surrendered a combined $1.1 billion in market cap off peak levels before bouncing back this week. 

Amazon was the only stock to beat the market, so let's start there. The world's leading online retailer got the holiday shopping season started in strong fashion. It sold hundreds of millions of things over the five days starting on Thanksgiving -- Amazon rarely gives us a hard count as it pats itself on the back -- culminating with a record day of sales on Cyber Monday.

Alphabet was the other FAANG stock to move higher, and most of its 1.9% gain came on the final trading day of the month. Some see it as a beneficiary of the upheaval at Facebook, as Facebook's problems could shift online ad budgets back to emphasizing Google and Alphabet's other sites and platforms.

Apple's slide has been well-documented. Sales of its iPhone XR have been soft by most accounts, and reports of suppliers experiencing a cutback in component orders from Apple are only fanning the flames. Apple announcing in its fiscal fourth-quarter report that it will no longer offer up unit sales data as it has every quarter makes too much sense. If you have nothing nice to say, don't say anything at all. 

Facebook continues to flop from one scandal to another. It's getting that much harder for CEO Mark Zuckerberg and COO Sheryl Sandberg to hold on to their posts, but the worst thing for investors is that all of this negative press is weighing on users and advertisers. 

Netflix had the kindest slide of the three declines, but a better than 5% hit when the market moves nearly 2% higher is no joke. Netflix may have put out a blowout quarter in mid-October, but the narrative through November was all of the companies beefing up their proprietary content to make the market leader less of a "must-have" service.  

FAANG stocks won't stay down forever, but it wouldn't be a surprise if the hardest-hit companies take a bit longer to return to investor fancy. FAANG is no longer a basket of bellwethers; it's every tech stock for itself right now.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rick Munarriz owns shares of Apple and Netflix. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, and Netflix. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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