$1,000, 5 Years Later: FAANG Stocks Roar

$1,000, 5 Years Later: FAANG Stocks Roar

(Photo by Zoë Reeve on Unsplash)

Despite an ongoing pandemic and a struggling underlying U.S. economy, the Nasdaq is now trading more than 90% above its March 2020 lows. Any tech investor during the past five years knows just how much of the recent growth in the tech sector is attributed to the five growth superstars of the Nasdaq: Facebook, Inc. (FB), Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), Netflix Inc (NFLX), and Alphabet Inc. (GOOGGOOGL).

These so-called FAANG stocks continue to deliver year-after-year of incredible growth numbers, even as their market caps swell to some of the largest in market history. While other companies were crushed by the pandemic, these FAANG stocks thrived in an environment of social distancing and remote working.

Tech Leadership Continues: Investors have done extremely well overall in the past five years, but some stocks have certainly performed better than others. The S&P 500 SPY total return in the past five years is 110.5%, but the Nasdaq’s total return in that stretch is an incredible 198.9%.

The Nasdaq kicked off 2016 trading at around 4,900. Concerns over slowing economic growth in China sent the index tumbling to as low as 4,209.76 in early 2016, its low point of the past five years. From that point, growth numbers from the FAANG group and the rest of the tech sector sent the Nasdaq on a tear. The index broke the 6,000 mark in 2017 and 8,000 mark in 2018.

At that point, the Nasdaq ran out of steam. A trade war with China, Federal Reserve interest rate hikes, and ramping regulatory scrutiny of the FAANG stocks sent the Nasdaq tumbling back down to as low as 6,190 by the end of the year.

From there the rally resumed, and the Nasdaq was back making new all-time highs again by mid-2019. The index ultimately peaked at 9,838 prior to the 2020 COVID-19 pandemic sell-off in March, which dropped the Nasdaq all the way back down to 6,631.

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