Facebook (the “F” in FAANG) lost close to $120 billion in market value on Thursday, the largest such fall in history, falling 24% intraday and closing 19% lower. The drop topped Intel’s record loss in market value of $91 billion which had stood for almost 18 years. The tech-heavy NASDAQ, which was -1.4% overnight, closed only 1% lower and the NASDAQ-100 futures only about - .34%. With such a high profile stock taking such a beating and the NASDAQ surviving that beating so well, we have to consider that the underlying strength may be stronger than people thought.
What many people know as the FAANG stock, which is Facebook, Apple, Amazon, Netflix, and Google, we refer to as FANMAG. Full disclosure; the term was “borrowed” from Pimm Fox, a prominent journalist on Bloomberg Radio, but it represents Facebook, Apple, Netflix, Microsoft, Amazon, and Google. The addition of Microsoft is important because of its size, recent performance, and influence over not just the NASDAQ, the Dow and S&P as well. Of these important tech companies, the only one who has not yet reported earnings is Apple. The only other one to have a bad day after earnings other than Facebook is Netflix. Nowhere near as bad, but the stock is still under pressure. Lately, the importance of the FANMAG stocks has talked about in the financial media, but perhaps overblown. Amazon reported after the bell Thursday and while it beat on EPS, it missed slightly on revenue yet the stock was up in post-market trading. The NASDAQ, despite Thursday’s loss, is still up over 4% for the month of July. The moral of this story is don’t be too much of a fan of FANMAG. One company can do damage to the NASDAQ and add volatility, but the overall market and overall earnings picture will win out.