FANG Stocks: Definition, Companies, Performance, and How to Invest

What Are FANG Stocks?

In finance, the acronym "FANG" refers to the stocks of four prominent American technology companies: Meta (META) (formerly Facebook), Amazon (AMZN), Netflix (NFLX), and Alphabet/Google (GOOG). FANG stocks are famous for the impressive growth they have experienced, with each member's stock price more than doubling at times since 2018.

In 2017, the company Apple (AAPL) was also added by some analysts, resulting in the new acronym "FAANG." Apple's stock price increased more than 113% between August 2018 and August 2023.

Understanding FANG Stocks

The term "FANG stocks" was initially coined by The Street's Bob Lang and later popularized by Jim Cramer on his CNBC TV show Mad Money. It is now widely used by market commentators and analysts. The stocks referred to by the acronym are all well-known and richly-valued technology companies that trade on the Nasdaq exchange, a collection of approximately 5,000 American companies. Many other companies traded on the Nasdaq exchange are also considered growth investments, although very few have matched the impressive growth of the FANG stocks.

Despite their common reputation as successful growth companies, the business models of the FANG stocks are distinct.

Facebook (Meta)

Facebook, for example, is the world's preeminent social networking platform. With a monthly active user base of more than 3.88 billion people as of June 30, 2023, Meta can claim over 50% of the world's population as its customers. To monetize this extraordinary user base, Facebook sells ads targeted based on users' personal preferences and usage patterns.

Amazon

Amazon, meanwhile, is a leading business-to-consumer (B2C) e-commerce platform that uses leading-edge cloud computing and data analytics technologies to sell a retail catalog. Although Amazon initially pioneered the sale of books online, books now represent much less of its overall product catalog than when it started.

Netflix

Netflix is also known for its impressive customer growth. An online entertainment streaming service specializing in movies and television shows, the company's subscriber base has grown exponentially in recent years, from 22 million in 2011 to more than 238 million in 2022. To compete with new entrants to the streaming market, Netflix has also begun aggressively producing exclusive content, moving beyond its traditional role as a content aggregator to a major content producer in its own right.

Google (Alphabet)

Alphabet has leveraged its core expertise as the world’s foremost search engine, developing a highly profitable online advertising business while driving user retention through popular web applications such as YouTube, Google Docs, and Google Maps.

FANG Stock Performance

With these impressive facts in mind, it is no wonder investors have been enthusiastic about the FANG stocks' business prospects. In recent years, this enthusiasm has been supported by the companies' financial performance, which has caused substantial increases in their respective stock prices.

In the trailing twelve months (TTM) as of August 2023, for example, Meta has reported revenues of over $116.6 billion and a net income of more than $23 billion. Meanwhile, Amazon showed an astounding $544 billion in revenue but produced a net income of -$2.7 billion. Over the past five years, these two company's stock prices increased by roughly 62.3% and 41.3%, respectively.

Netflix and Google have also shown strong TTM performance, with Netflix posting revenues of over $31.6 billion and a net income of $4.5 billion. Google generated $280 billion in revenues and nearly $60 billion in net income. Buoyed by these earnings, Netflix's stock rose by 26.8% in the past five years, while Google's rose by about 113.2% over the same timeframe.

How to Invest in the FANG Stocks

Since there are only a handful of stocks in the FANG universe, it is relatively easy for investors to trade these names directly with their broker, especially now that many brokers offer zero-commission trading.

Currently, no funds hold only FANG (or FAANG) stocks. Instead, investors looking for ETFs that have heavy weightings of these could look to tech-heavy ETFs such as those that track the Nasdaq 100.

The Bottom Line

Meta (Facebook), Amazon, Netflix, and Alphabet (Google) make up the acronym FANG, a group of companies popular with investors due to their phenomenal growth over their life times.