Herewith my letter. There is much more I could have added but letters have to be brief. Of the UK bank lending to business, over 80% is for construction with over 80% of that construction being in London and over [...]
FAANGS Can Only Get Better Or Is It MAGA?
In August 2018 Apple was first to reach a market capitalisation of $1 trillion dollars (tn) and now in quick succession Amazon has also burst through the $1tn valuation. Amazon achieved impressive quarterly profits of $2 Billion in July which has lead to a rapid share price surge in recent weeks. Who will be next? Alphabet better known as Google and helps form the acronym in both FAANG and MAGA is a good bet.
However, it’s not all been fair weather trading for these mega-cap tech companies this year. Facebook has seen its advertising growth rates slowing amid subscriber numbers reducing after recent privacy and fake account scandals which caused its market capitalisation to fall sharply. In one day it lost $150 Billion in value- that’s more than the total valuation of old market favourites like General Electric and Time Warner. However, they have recovered somewhat and it goes to shows that a $150 billion of value lost doesn’t scare or impress markets as much as it used to. Old GE isn’t even in the Dow Jones Industrial Index anymore- how times have changed.
More concerning to modern technology investors is the acronym’s N-component or the streaming company Neflix. After a period of impressive subscriber growth and successful programme production its shares fell 14% in July after subscriber numbers disappointed investors. With debt financed production and a sky-high price-to-earnings ratio investors will hope it’s a blip and subscriber numbers keep on climbing and watching otherwise they’ll be high drama ahead on its investors’ screens rather than their subscribers.
The more business-to-business acronym MAGA which also has Microsoft as a component, along with the three tech titans already mentioned, has seen its revenues break through $100 Billion barrier recently and its share price reflects its continued success as the oldest of all the technology titans.
However, the political tide against the mega-techs is going to get rougher with the US Federal Trade Commission for one is to investigate competitive practices and consumer protection issues along with calls in several countries including the UK, about tax avoidance and employment practices. Add this to trade wars between the US, China and the EU the fast appreciating market capitalisations of these companies may struggle to reach further dizzying heights- for a while anyway.