What does FAANG mean? For those who are new to investing, this acronym is the 5 major players in the stock market today.
• Formally Google, now a subsidiary of Alphabet
Many have argued that other key players should be added to the list, like Microsoft for instance. However, others think that Facebook and Alphabet are not as influential as they once were and should be removed. Regardless of names on the FAANG list, one can be certain that big-name companies will spearhead how the market responds.
How They Influence Our Lives Today
Just how much of an impact do these 5 FAANG companies make in our lives? Let’s examine the numbers and influence.
Facebook: They have over 2.5 Billion active users worldwide currently. Facebook sells advertising space on its webpages and mobile apps that are geared towards its users.
Apple: There are over 588 million Apple users worldwide, with over 1.4 Billion devices. This includes all their products as well as apps like AppleMusic, AppleTv, and DApps.
Amazon: It is estimated that over 197 million people around the world visit Amazon each month. They not only have a retail side but also subscriptions for users and web services.
Netflix: They have approximately 167 million subscribers worldwide. While their primary source of income is monthly subscriptions, they also have a declining DVD rental factor to their services.
Alphabet: It is estimated there are over 2 billion users in the world with a Gmail account. Their primary source of revenue is Performance and Brand advertising.
Is there someone you know that doesn’t have at least 1 of these FAANG items in their lives today? Many online users can say they are successfully engrossed in at least 3, if not more, of these companies daily.
How FAANG Influences the Financial Market
With increasing popularity, FAANG stocks make up a significant portion of available investments. They have high market capitalization due to being around for quite some time and are major players in their industries.
As a combined unit, the FAANG stocks have a total market capitalization equalling over $4.1 trillion currently. With such a large financial presence, market fluctuations with these investments could start a trickle-down effect with other similar stocks. If these big-name investments jump or decrease suddenly, smaller companies typically follow suit in anticipation of bigger changes.
Are FAANG Stocks the Right Choice for Your Portfolio?
These FAANG stocks are publicly traded and are some of the most well-known companies, even for those new to investing. Popular investments that have been around for a long time tend to have a good track record for performance. Subsequently, examining past market history, FAANG stocks are a good choice.
While these popular investments are a good choice, ensure your portfolio is diverse and contains varied stocks from different industries. When investing in stocks like FAANG, they aren’t Get-Rich-Quick strategies, but typically sound investments as they solidify through time. If you are looking for long-term investments that perform, FAANG stocks might be the option to add to your portfolio.