Scoop the Stock Soup: FAANG, Tesla

Summary

• Technology players, particularly the US FAANG companies have played a significant role in battling the pandemic, leveraging a swathe of opportunities to outshine in the crisis.
• Of late, tech market darlings, FAANG stocks have been sweeping NASDAQ with bolstered financial performance in Q2 period and ended the market session in green on 6 August.
• Tesla’s robust growth in its top-line during the first half of 2020 has positioned the Company for a profitable second half of 2020.

In a famous tale, David, an ordinary boy defeated mighty 9-foot tall, Goliath by embracing his underdog position. This tale had become quite popular, and the analogy is used to look back at the situation wherever there is a tussle between small (underdog) and big (odds-on favourite) in a competitive scenario.

However, the time for Goliath has come. The market's favourite children tech Goliaths (FAANG stocks) encompassing Facebook, Amazon, Apple, Netflix and Google (Alphabet), as well as Tesla, have emerged stronger from the unprecedented COVID-19 crisis, with enlarged consumer base and top-line growth. It seems they have upgraded their version to be in the tale and swayed the market, with their innovative and unique offerings, as well as recognised brand power.

Furthermore, on a huge scale, many of these companies are now bigger than GDPs of many nations across the globe.

Jeff Bezos-led juggernaut, Amazon has been unstoppable. As on 6 August 2020, the market capitalisation of Amazon was US$1.62 trillion. Interestingly, the market cap of Amazon is higher than the combined GDP of Nigeria (US$0.448 trillion in 2019), Netherlands (US$0.909 trillion in 2019).

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With this backdrop, let us quickly go through the famous FAANG stocks as well as Tesla.

Facebook, Inc. (NASDAQ:FB)

Facebook, the Company that connects people worldwide introduced Instagram Reels on 5 August 2020. These Reels are a new way to create and discover 15-second multi-clip, entertaining videos on Instagram.

Moreover, Facebook unveiled its results for the quarter ended 30 June 2020 (Q2 FY20) on 30 July 2020. FB noted an upsurge of 10% (pcp) in its advertising revenue, which stood at US$18,321 million for Q2 FY20. Additionally, revenue from other sources rose by 40% to US$366 million.

Furthermore, Facebook witnessed surged y-o-y daily active users, monthly active users and monthly active users by 12%, 12% and 15%, respectively.

Apple Inc. (NASDAQ:AAPL)

On 30 July 2020, Apple’s quarterly report for the period ended 27 June 2020 was published and the Company reported robust revenue growth of 11% (pcp) to US$59.7 billion primarily due to double-digit growth in both products and services along with growth in each of its geographic segments.

The net sales in the services segment were noted at US$13,156 million and the same for wearables, home and accessories stood at US$6,450 million.

Notably, the board of directors have also approved the four-for-one stock split to make accessibility of the stock to a wider range of investors.

As per Luca Maestri, Apple’s CFO, the June quarter performance of the Company demonstrates its ability to innovate and execute during tough times.

Amazon.com, Inc (NASDAQ:AMZN)

American multinational technology giant, Amazon divulged its bolstered financial position in its Q2 FY2020 results for the quarter ended 30 June 2020.

The Company witnessed an upsurge of 40% (pcp) in the net sales and stood at US$88.9 billion. Amazon’s operating cash flow noted an increase of 42% (pcp) to US$51.2 billion for the trailing 12 months.

Amazon also provided guidance for Q3 FY2020 that are as follows:

• Net sales are anticipated in the range of US$87 billion - US$93 billion.
• Operating income is anticipated to be amid US$2 billion and US$5 billion.

On 5 August 2020, the Company disclosed its plans to expand in the Tampa Bay Area by expecting a launch of a new, state-of-the-art Amazon fulfilment centre in 2021.

Did you read; FAANGs Defining Resilience Amid Market Downtrends

Netflix Inc. (NASDAQ:NFLX)

A global internet entertainment service provider, Netflix has experienced a boosted demand in usage to fray boredom during the pandemic.

On 16 July 2020, the Company announced its quarterly results for the period ended 30 June 2020. NFLX has noted a soared revenue of US$6,148 billion and net income of US$720,196 million.

Furthermore, the Company has also witnessed a substantial growth in new paid subscribers, with the addition of 10.1 million in its second quarter driven primarily by better-than-anticipated acquisition and retention.

Guidance:

• The Company anticipates 2.5 million paid net adds in the Q3 FY20 as compared to 6.8 million in Q3 FY19.
• Netflix is further aiming for the full-year operating margin of 16%.

Alphabet Inc. (NASDAQ:GOOGL)

On 3 August 2020, Google announced a long-term, strategic partnership with ADT, the US home security firm.

Through this deal, the Company would combine its Nest products (devices, services, and technology) with ADT’s leadership to provide services to customers of its Nest home security devices. Furthermore, ADT would offer few Google devices to its clients starting 2021 and would expand the integration in 2021.

Financial Performance:

On 30 July, the parent company of Google, Alphabet Inc. updated the market with Q2 earnings report for the period closed 30 June wherein, the Company witnessed its first quarterly YoY revenue decline in history, dropping by 2% to stand at US$38.3 billion.

Owing to the pandemic and slowed economic growth, numerous advertisers pulled their expenses in the June 2020 quarter.

Notably, the non-ads revenue grew strongly from Google Play, Cloud and YouTube.

Tesla Inc (NASDAQ:TSLA)

On 22 July, the electric car manufacturer, Tesla unveiled its Q2 results for the period ended 30 June 2020 and reported total revenues of US$6,036 million.

Further, Tesla posted positive quarterly earnings as mentioned below:

• GAAP operating income was recorded at US$327 million, with 5.4% operating margin.
• Cash and cash equivalents witnessed an upsurge of US$535 million to stand at US$8.6 billion, driven by positive cash flow less capex of US$418 million.

The Company believes that the progress made in the first half of 2020 has positioned Tesla for an effective second half of 2020.

Furthermore, the Company unveiled its plans for building three factories on three continents concurrently later this year.

Tesla and FAANG Stocks’ information, as on 6 August 2020: