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Summary
- It will not be an exaggeration to mention that as per NASDAQ, FAANG stocks not only withstand the market blow but also put up a “great show”.
- The market darlings of technology sector, FAANG stocks have grown stronger over the years, post-adoption of both defensive and offensive strategies.
- Unsurprisingly, in the wake of prevailing crisis of COVID-19, big technology companies have snuffled the opportunity, and have been placing new bets and fuelling funds in investments to gain a competitive edge.
Businesses need to embrace competitive strategies to stay afloat and maintain their respective positions in the competitive market.
In a sector like technology wherein strategic interactions amongst competing firms are quite prevalent, companies are continuously encompassing defensive and offensive strategies.
If you aren't familiar with the concept, companies that undertake offensive strategies explicitly target competitors from which they want to seize market share. On the other hand, defensive strategies are usually utilised to grasping onto what one has and reverse an attack from a probable competitor by bringing into play a company’s competitive advantage.
Despite the horror stories of the pandemic in the past couple of months, Nasdaq Composite index has demonstrated a perfect recoil post hitting the lowest of 6,860.67 points on March 23, 2020. Of late, the index has rallied to record new highs and had been closing above 10,000 points mark, with robust gains.
On 16 July, Nasdaq Composite index ended the trading session at 10,473.83 points, marginally decreasing by 0.73% from its last close.
Did you read; NASDAQ surged up above 10,000 – Tech stocks setting a new benchmark
The recent rally has a contribution from market darlings FAANG stocks that have been burgeoning with the digital wave, and have noted an enlarged consumer base and top-line growth.
Furthermore, pandemic has proven to be a boon for the big technology companies who have defied waves of uncertainty by making strategic moves to survive and thrive in the market.
Let us now deep dive and appraise ourselves with the strategies adopted by the FAANG stocks.
It is often said the best defense is a good offense. This certainly holds true for Amazon and Netflix.
Lately, Jeff Bezos-led juggernaut, Amazon, had witnessed share price closing at above US$3000 (it ended at US$3008.87 and US$3084 on 15 and 14 July, respectively).
The e-commerce giant drove to an astounding height, primarily due to its online marketplace and cloud computing services.
Amazon is capitalising on the soaring demand for essentials via online business platforms and announced that it had hired an additional 1,75,000 workers in its fulfilment and delivery network during March and April.
Lately, the e-commerce giant also added more airplanes to its growing Amazon Air fleet, for delivering the products to customers, and transporting personal protective equipment for its own workforce and essential frontline personnel across the US.
Furthermore, Amazon had unveiled its plans to acquire an autonomous vehicle start-up, Zoox to bolster its position in the promising autonomous driving space in June this year.
Did you read; Amazon Acquires Self-Driving Car Start-up Zoox for $1.45 billion
Netflix emerged as a star performer with the aggressive strategy across numerous countries such as India and has noted a run-up in its share price and customer base although the platform continues to be premium.
Also, Netflix noted an incremental growth of new paid subscribers with the addition of 10.1 million in its second quarter ending 30 June 2020, as per its recently released results on 16 July 2020.
The leading streaming service provider also witnessed soared revenue of ~US$6.15 billion and net income of US$720 million.
Owing to lockdown, homebound people across the world have been consuming more content. Notably, Netflix has been lauded time and again for its top-notch quality and a melange of content.
Three of the leading technology companies in FAANG group- Apple, Google, Facebook, have been following defensive strategies.
These big technology companies have not witnessed aggressive growth in their stock prices. However, they have maintained their respective strong positions during the pandemic with their defensive investments.
These investments are formulated on intrinsic business fundamentals, which incline towards durability and resilient attributes over time.
While the social giant had tussled with an internal rebel and criticism over its rebuff to roll back inflammatory posts of the US President Donald Trump, Facebook has been fetching other bets surreptitiously.
Of late, India’s antitrust watchdog, the Competition Commission of India, approved the recent pumped up investment of Facebook in June, worth US$5.7 billion into Reliance Jio; establishing a foothold in the growing region.
Facebook is also gearing up to take on TikTok‘s userbase by launching its own take on short-form video sharing called Instagram Reels worldwide.
Did you read; Condemned for Misinformation, Hate & Harassment, Facebook Says- “We Are Making Progress”
The search giant, Google has been witnessing a swelled demand for its cloud services primarily due to new normal – work from home which entailed a move of workloads to the cloud-based systems.
Recently, Google introduced its overhauled Gmail to reposition it as a collaboration hub with access to video, chat, and documents. This strategic move has been undertaken to bring in closer strife with its competitors.
Google has also contributed funds worth US$4.5 billion for backing Reliance Jio in India in developing customised version of Android operating system to run on an entry-level 4G and 5G compatible smartphones.
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The other US company, a part of FAANG stocks, Apple is thriving in the market with the soared demand for its services business and is building up plans to launch a 5G enabled iPhone 12. However, the release date of the same is still awaited.
In its WWDC 20, Apple had unveiled that it is transitioning its Macbook with the shift to ARM-based ‘Apple Silicon’ processors. The first Apple silicon based Macbook is anticipated to be up for grabs by the end of 2020.
Moreover, Apple, in its WWDC 20, made several upgrades and announcement such as Redesigned Xcode, App Clips and Widgets, More Customisable Apps with Mac Catalyst, to name a few.
Did you read; Investing Tips: 4 Reasons Big Techs can always stay your best pal
FAANG Stock Performance
Below is the glimpse of FAANG stocks' performance, post-market close on 16 July 2020:
Stay tuned to witness the effect of released results on the stock prices of Amazon, whose results are expected by next week. Further, Alphabet, Facebook, and Apple results are expected in the last week of July.
