Thursday's Market Minute: The Last FAANGs Standing: AAPL, AMZN

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In the heart of another corporate earnings season, Apple and Amazon are the last FAANGs standing. And while it’s no secret that while this year has been turbulent, it’s been even more volatile for the FAANG stocks. As of Wednesday’s close, the S&P 500 has fallen over 12% in 2022, while Meta Platforms FB has shed roughly 48%, Netflix NFLX a whopping 69%, and Alphabet GOOGL is down over 21%. Apple AAPL and Amazon AMZN remain to be the best performers of the pack – but investors are still bracing for any outcome Thursday afternoon with, so far, the FAANG stocks going 2-1 in their earnings.

It’s hard to forget Netflix’s massive selling that occurred last week when it reported disappointing subscriber figures, sending shares reeling. The stock is down 40% over just a few sessions and is sitting about 70% off its peak from last November. On Wednesday, Alphabet shares also fell after Google’s parent posted first quarter sales that missed the Street’s expectations, blaming much of the disappointment on sluggish advertising growth and a slowdown at the world’s largest video platform, YouTube. The company’s CFO said revenue growth at its advertising business will continue facing tough comps in the current quarter, and the tech giant is also grappling with the suspension of its commercial business in Russia.

Thursday morning, Meta Platforms is offering a sign of relief for FAANG investors, with shares surging following earnings that topped estimates even with disappointing revenue. Daily active users totaled 1.96B vs 1.95B expected, with average revenue per user (ARPU) also surprising to the upside, coming in at $9.54 vs. $9.50 anticipated. Outside of these two figures, nearly every other number was a miss. But following its 26% nosedive after its previous quarterly report, it seems like the Street is more focused on DAUs than all other metrics. In the fourth quarter, DAUs declined for the first time in the social media platform’s reporting history. 

Now, all eyes will be on both Amazon and Apple to see if the last two FAANG names can settle the score. For both companies, investors are fearful of disappointing guidance, which could send shares tumbling. In terms of Apple, it seems much of the focus will be on China. For Amazon, the attention will be more tied to its pricing power, with the e-commerce giant offsetting some of its inflation costs with fuel surcharges, as well as increased Prime subscription costs. And while there may be lots of speculation heading into both earnings events from the Street, one statement is objectively true among all, and it’s that the weight of these companies on the overall market is enormous.

Every year since 2014, the group of FAANG stocks have added more to the S&P 500’s returns than their weight in the index implies, according to Bespoke. They have also contributed to more of the market’s gains than the rest of the stock market combined in three of the last eight years. Which means ahead of Apple and Amazon’s numbers – brace yourself.

Image credit: Wikimedia Commons

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.