FANG+ News to Know
Amazon Inc (AMZN) On Valentine’s day, Amazon announced that it was pulling out from its plan to build a New York City headquarters. In an official release Amazon, cited polls showing “70% of New Yorkers support our plan and investment” but the political opposition was too great for the tech giant. Despite the negative headlines regarding the NYC headquarters, in February the company moved forward on numerous initiatives such as acquiring home router company Eero, engaging in an investment initiative through Amazon Studios to develop original movie content for Amazon Prime Video, and adding former PepsiCo CEO Indra Nooyi to it’s Board of Directors.
Baidu Inc (BIDU) Baidu reported better than expected Q4 profit, but earnings slumped 50% due to content costs. The company has increased spending on its family of apps—notably iQiyi, the Chinese equivalent of Netflix—which could lead to lower margins in the near term. iQiyi added 37 million users during the quarter. Since 2017, the company has shifted away from ride-hailing and home delivery to focus on its core business: AI platforms and autonomous driving.
Nvidia Corp (NVDA) Nvidia slightly beat expections on Q4 revenue and EPS. CEO Jensen Huang said during the conference call that “the combination of post-crypto excess channel inventory and recent deteriorating end market conditions drove a disappointing quarter.” Following the cryptocurrency craze of 2017, the company rushed to fulfill the new demand for mining in early 2018 just as the crypto market collapsed. This has left the chip supply chain flooded with GPUs, with GPU shipments dropping 3.3% year-over-year. Please see our Chart of the Month below which compares NVDA, Bitcoin, and the Nasdaq since Bitcoin’s price peak on 12/18/2017.
Facebook Inc (FB) According to Edison Research, the social media platform has lost an estimated 15 million users in the U.S. since 2017. The biggest drop is in 12- to 34-year-old group while 55+ is still seeing meaningful user gains. The report cited Instagram and Snapchat has catalysts for the drop in users among young people.
Alphabet Inc (GOOGL) Australian watchdogs call for tightening regulations on the search engine, claiming its 94% market share in Australia coupled with its opaque methods for ranking advertisements incentivizing their businesses over advertisers.
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The NYSE FANG+™ Index includes 10 exceedingly liquid stocks that are meant to represent a significant segment of highly-traded growth technology companies. The index’s underlying composition is equally weighted across all stocks. While the performance of other indices weighted by market capitalization can be dominated by a few of the largest stocks, an equal-weighting can allow for a more representative portfolio, particularly in the tech sector. More information on this index can be found here.
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