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FANG Stocks: Still Overvalued

  • Even with a significant pullback in March, we continue to hold a negative view of superstar technology and tech-enabled stocks as a group.
  • In related sectors, we see better opportunities in auto, technology hardware and semiconductor manufacturers.

The superstar FANG stocks—Facebook, Amazon, Netflix and Alphabet’s Google—and their peers reached record highs in March, racking up compound returns of almost 40% per year since the end of 2015. Then, they experienced a setback, losing around 15% of their value.

In August of last year, we wrote about the popularity, the valuation and the volatility of these stocks. Our conclusion then was that better buying opportunities likely lay elsewhere. We believe the same is true today. Some may see recent pullbacks in this cohort of high-growth, high-tech “glamour” stocks as a “buy on the dip” opportunity. We think the equity markets continue to offer many better alternatives.

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