Just a flesh wound! These US tech stocks are holding on during COVID crisis
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Despite seeing their worst trading days ever, some of the FAANGs (Facebook, Amazon, Apple, Netflix and Google) and other big tech stocks are proving surprisingly resilient in the face of fear, pestilence, and death.
Overnight the market they’re listed on, the NASDAQ, fell 4.7 per cent on March 18 after closing in the black the previous day.
Data from Stake, a service that allows Australians to invest in US stock markets, shows Aussies at least are diving into Apple, Amazon, Microsoft, Tesla and Facebook.
Stake said yesterday that it was seeing four buy orders for every sell order, when in February — when global markets peaked — that ratio was below 2:1.
“Clearly some investors are seeing value at these levels after the falls – most of these stocks are down 20 per cent for the month, with TSLA down closer to 50 per cent,” it said.
Over 10 years, the most defensive stocks to hold today are Netflix and Amazon.
They have steadily increased over that time and the current market crisis is, so far, a blip on that track record. Over the last year however, their performance hasn’t been quite so sexy.
Netflix has struggled to grow its audience in recent years.
But in early March, Piper Sandler analyst Michael Olson suggested Wall Street may be seriously underestimating Netflix’s subscriber growth, partially caused by coronavirus lockdowns and “cocooning”.
His data suggests that figure is double what other analysts are estimating, at 3.8 per cent year-on-year. Sandler also believes international subscriber growth will come in at 30.9 per cent.
Analysts are also looking at retail, entertainment and restaurant closures in the US as means of support for Amazon.
Tesla is the biggest loser, massively peaking in February, but it has only fallen back to levels seen at the end of 2019.
Stock in the electric car maker began running at the end of 2019 when analysts started putting lofty price targets on the company and people like billionaire investor Ron Baron began making noises about Tesla becoming a trillion dollar revenue company within 10 years.
Over the last year, the most defensive stocks were Microsoft and Apple, even in spite of Apple’s supply chain struggles which are mainly based in China and Taiwan.
Facebook and Google have suffered from the opposite view to Amazon and Netflix, which is that consumers will close their wallets, thus reducing their ad businesses — despite a Presidential election set to put millions into the US ad market.