Last week was a nice bounce-back for the beleaguered tech giants making up the FAANG group of stocks, but how will Facebook, Amazon and the rest of the gang fare going forward?
Pretty well, says Wedbush Securities’ Joel Kulina, who thinks that while investors are a little cagey on Google and Apple as growth prospects, regulatory and anti-trust concerns are not as worrisome as one might think.
It’s been a wacky ride for the tech sector in 2019, as the FAANG group of stocks try to win back last year’s gains lost over the fourth quarter 2018. And while the first few months of the year were, like the rest of the market, good for the FAANGS, the same can’t be said for the last month or so, where stocks like Google and Apple posted double-digit losses for the month of May.
The level of concern has varied depending on what name you’re talking about but, in general, worries over trade between the US and China have dented expectations on stocks like Apple while regulatory and antitrust fears have dominated the discussion around others like Google, Facebook and Amazon.
Last Monday, the US Justice Department and the Federal Trade Commission jointly announced that they would be looking into potential anti-trust and anti-competitive practices concerning Google, Facebook, Amazon and Apple, causing investor shakiness on the names. Yet by Friday, the week looked a lot better for the tech giants, with all of them finishing in positive fashion as the NASDAQ ended the week up over 400 points.
Kulina says that tech’s bounce-back had a lot to do with eased fears around regulation.
“A lot of guys probably did their checks with their anti-trust experts and, really, things aren’t as bad as they appeared originally. At least nothing in the near term is going to happen to impact the big three,” says Kulina, head of technology and media trading at Wedbush Securities, in conversation with BNN Bloomberg on Friday.
Kulina says that while investors continue to be long on both Facebook and Amazon, there’s less faith in ongoing success from Google and Apple.
“Google is probably the most shorted of the FAANG stocks,” Kulina says. “Their earnings going back to late April were arguably bad across the board and many viewed it as dead money coming out of their print, and I think there’s no reason to jump into Google quite yet.”
“Especially tech investors, they want to be long growth. Hence, Apple is now one of the red-headed step-children in large-cap growth. People would much rather be long Facebook, Amazon, Microsoft, Salesforce than Apple and Google. People view Apple as lacking innovation, they’re still heavily reliant on an iPhone business, which with all the recent supply disruption, there could be some serious risk when they report next,” he says.